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Hello OranjeMannetje,

I’m sorry to hear you are struggling with your income and employment. Certainly you may want to cease investing or at least contributing money to your investments and start spending. In terms of “moving your money elsewhere”, if you know need it to live on or pay for education as you change fields, that is your perogative. But I’ll be here to attempt to discourage you from moving to a different, “trendy” investment method.

Buffett said something like, “all investing is value investing”:

“In his letter to Berkshire Hathaway shareholders in 1992, Buffett wrote: ‘Most analysts feel they must choose between two approaches customarily thought to be in opposition: "value" and "growth." Indeed, many investment professionals see any mixing of the two terms as a form of intellectual cross-dressing.

‘We view that as fuzzy thinking (in which, it must be confessed, I myself engaged some years ago). In our opinion, the two approaches are joined at the hip: Growth is always a component in the calculation of value, constituting a variable whose importance can range from negligible to enormous and whose impact can be negative as well as positive.’ ”

So what’s been going on with the market? One can only conclude a lot of speculation. But Magic Formula stocks have also participated in the market boom as well. It just may depend on which ones you own.

I’ve written about this before, but I may benefit from some biases in my Magic Formula stock selection: I prefer dividend payers, large caps, and stocks with positive current and predicted earnings. I hold my stock picks for a long time, as my past research indicates good companies fall of the lists too soon. I was lucky to avoid Chinese companies (for personal reasons: I don’t believe data coming from China, and that includes company performance data) when they showed up on the screen. I’ve learned to avoid biotechs, which still show up regularly. I also focus on options as a method to capture consistant but limited returns (my goal is 20%).

And I’ll apologize right now that I don’t have figures, but my investments in Magic Formula stocks have been very satisfactory this year so far. Here’s a list of my holdings, which I’m sure you’ll recognize as fantastic performers. They are all purchases from when they showed up on the website:

Paypal, Microsoft, Apple, eBay, Pfizer, Medifast, Qualcomm, Lumentum, and Home Depot

Yes I have some losers as well: Walgreens, Gamestop, Michaels, Natural Health Trends, Netflix (for now!)

But by and large, I’m quite happy.

Thank you for continuing your posts!
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