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No. of Recommendations: 3
Hi NoordelijkOranje,

First I want to thank you for the consistency at which you have reported your results for over 10 years. I think this is one of the most helpful services you have provided to this whole forum on this topic.

I have read all of your posts and have tracked your results in an excel file with drawdowsn. It is encouraging to people like myself who want to try the MFI that you have earned over 10% IRR over a 10 year period even through the crash of 2008. I have a few questions though which I hope you could answer.

1. Please have a look over at my excel file which tracks your results. Is it accurate? I plug in an initial starting capital of $100000 for example sake and get the account balances for the different time frames according to your stated IRR’s.

 NoordelijkOranje  IRR Equity Yearly gain MFI Data IRR R3000 R2000
2006-02-01 $100,000
2006-12-31 5.20% $104,315
2007-12-14 -4.60% $91,729
2008-08-05 -7.86% $81,493 -0.2
2009-11-14 4.48% $117,862 -2.21 -4.52
2010-08-07 0.25% $101,130 0.63 -2.65 -2.85
2010-10-02 2.85% $114,013 2.67 -0.2 -0.45
2011-01-02 5.11% $127,766 8.40% 5.56 2.06 2.68
2011-04-04 5.64% $132,774 6.15 3.2 4.08
2011-07-06 6.99% $144,192 6.43 3.04 3.58
2011-10-01 2.56% $115,401 1.63 -0.7 -1
2012-01-01 4.67% $131,003 2.53% 2.78 1.89 1.49
2012-04-05 6.91% $150,989 3.85 4.08 3.64
2012-10-07 5.29% $141,009 2.77 3.17 2.67
2013-01-01 4.78% $138,121 5.43% 2.15 3.87 3.51
2013-04-01 6.73% $159,485 3.62 5.33 5.15
2013-07-02 8.35% $181,265 5.18 5.47 5.35
2013-10-08 9.62% $202,219 7.39 6.13 6.51
2014-01-08 11.15% $230,914 67.18% 8.53 7.22 7.42
2014-04-06 10.99% $234,325 9.33 7.26 7.34
2016-07-02 11.35% $247,159 9.13 7.64 7.37
2014-09-30 10.96% $246,288 8.17 7.41 6.21
2015-01-04 11.21% $257,899 11.69% 8.72 7.81 7.14
2015-04-05 11.05% $261,369 7.9 7.8 7.43
2015-07-07 11.08% $268,991 7.96 7.6 7.28
2015-10-05 10.42% $260,692 6.3 6.56 5.68
2016-01-05 10.39% $266,514 3.34% 6.06 5.71 5.91
2016-04-05 10.41% $273,686 5.35 6.97 5.6
2016-07-08 10.24% $276,079 5.12 7.07 5.84
2016-10-02 10.45% $288,692 5.32 7.33 6.56

Num DD's Drawdown Recovery Days Drawdown$ Peak1 Peak1Date Valley ValleyDate
1 21.88% $22,822.00 $104,315 31-Dec-06 $81,493 5-Aug-08
2 14.20% 414 $16,732.00 $117,862 14-Nov-09 $101,130 7-Aug-10
3 19.97% 274 $28,791.00 $144,192 6-Jul-11 $115,401 1-Oct-11

2. Drawdowns: Specifically in 2008 with the market crash, can you check how far your equity curve went into drawdown? The maximum peak to the minimum valley. Did it go down 60%, or more of your equity? I am only showing drawdowns of 20% based on your figures, but at that time period they are sometimes close to 12 months apart so I’d love to know the different drawdowns you experienced throughout the 10 year period that were more than 20%. And also if you can let me know how long it took (months or quarters to come back to the peak and return to new highs). Was it 2 years or 8 quarters? It would be wonderful if you could send an excel file of equity amounts at different times, %percentages are what matters if you don’t want to disclose amounts you could scale as though it was $100,000 initial capital or otherwise.

3. A question on the strategy, with fixed $ amounts when buying each of the 40 stocks and about not reinvesting the profit. If I use an example of $100000 initial capital, that would represent $2500 investment per stock. You mention you kept this the same, no matter if it had gains or losses.

a. When did you start increasing the fixed amount per stock, or increasing your overall capital to invest? Example you may have started with $100,000 but gained confidence in the method so increased it to $200,000 and started investing $5000 per stock. Did your IRR take this into account?

b. I’m trying to see what my results would be in percentage terms if I would have simply used $100,000 and fixed $2500 per contract throughout the whole 10+years. Would the IRR be the same, and equity amounts be somewhat accurate? It’s hard to get a picture if you don’t know how much new capital someone put in and when.

c. Is there a reason why you chose not to reinvest the new profits or losses each year into the new stocks purchased? I think in the book he mentions to reinvest the new money into an equal set of stocks. Ex if you spent $25,000 for 10 stocks at $2500 each and after 1 year it turned to $40,000, why not invest in 10 new stocks at $4,000 each? I think your performance would be much greater no?

d. Do you have an idea of how the equity performance would have been had you done that? If I would have reinvested into the same formula, would it have been better or far worse?

e. Instead you used that money to reinvest elsewhere? Should we assume for the calculation of your IRR that that portion of profits simply went into cash and stayed stagnant?

f. Obviously you would have had greater volatility, greater drawdowns in 2008 though and greater returns when things went your way.

4. In your MFI Data plan, that has yielded 5.32% IRR vs your 10.45% at last posting, was this one that just used the top 25 blind picks in from the MFI site each quarter, just picking everything including Chinese stocks? Or was it the one that used ROA and PE from different screens? Details please?

5. Your real money plan that yielded 10.45% return? I think you mentioned that part of this was mixed with a portfolio where you allowed to invest for you. Now had you said that the whole thing was invested in your own method, 40 stocks 10 randomly picked each quarter, it seems reasonable to assume, if I did the same thing, I would get similar results 10%. But would you say that your IRR from your method, was similar, better or worse than the results from the portion that got for you? Appreciate your help here because the fact that you recorded your results for 10 years is like a verified backtest and gives encouragement to others, but if we don’t know how much the results were skewed by influence and how similar their results would have been to your own had you only done your own 10 picks per quarter.

I know I’ve asked you some pretty detailed questions and I hope you don’t mind. I just think you’ve done a fabulous job at being consistent and patient with the formula for over 10 years and that you’ve made your results available for everyone to see. This is quite encouraging and I’d love to have a conversation with you or get your detailed answers on these questions. I hope you don’t mind so many questions.

All the best,
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