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I, for one, would be interested in knowing what percentage gain individual members of the MI community have made on their Total % Return since they embraced that particular investment strategy. With a powerful enough incentive, even the most mathematically challenged of us can learn to appreciate and work with the requisite numbers.


I've got to admit that while I really have enjoyed the TMF site for the last couple of years, I've spent most of my (limited) time however reading the messages on the Mechanical Investing board. I haven't spent any time reading messages on this board until this minor controversy over Jamie Gritton's Feste Award was reported on the MI board. Jamie Gritton is an inspiration to many and has been one of the most generous and gracious contributors to MI and to MF in general.

I haven't been a contributor to the board in any real sense but I began "playing" with some mechanical-like techniques (Dog's of the Dow-style and some "home-grown" techniques) beginning in mid-1997. At first, I followed "virtual" portfolios and then occasionally used a screen to pick (and buy) an actual stock. I didn't really have specific plan for my real money portfolio and so I committed one of the most common errors of investing ... when my stocks (and the market in general) were doing poorly, I felt terrible and didn't spend any time thinking about the market much less put more money into it! When my stocks were doing well (and the market in general), I watched the prices every day and put more of our savings into stocks. This enabled me to buy high and then hide my eyes while my investments lost money.

Gradually, I noticed that the more "mechanical" I was about a particular stock or group of stocks (in terms of buying *and* selling), the better I did. I began my ValueLine subscription in April of 2000 and used some of the MI screens to pick stocks.

My wife and I moved our self-directed IRA's to Brown & Co. (from OLDE, which was becoming HRB) in Dec, 2000 and these portfolios have traded strictly mechanically on the first Friday of each month (using the top 8 stocks in the DH10RRS126-2s252 for what it's worth ... she gets 4 and I get 4). I wrote a computer program (a perl script actually) to pick the stocks and we followed the picks exactly (even when they looked silly!). Her average return from 1/1/01 until today is +26.13% (based on Quicken's Investment performance calculations). My IRA's average return over the same period is +28.23%.

Our taxable portfolio (16 stocks right now) was mixed between "mechanical" and "emotional" stocks up until July of 2001. I had noticed earlier in the year that generally the stocks that I had picked myself (without MI discipline) were not doing as well as the ones that were "Mechanically" chosen and traded. I finally sold the last of these stocks in July (for a loss) and from then on, it's been "Mechanical" and divided among 4 screens (I do a little tinkering from time to time, but with the screens and not with the stocks themselves). Our taxable portfolio's average return since then (7/1/01) is +43.41% (annualized). Based on the same period as above (1/1/01 until today), the average return is +30.23%.

I would like to emphasize that most MI investors have probably not done nearly as well as this in 2001 and one of the best explanations for this might be to say that I just got lucky. It's a big world and unlikely things are certain to happen. As near as I can tell, a good part of the success of MI is simply that it eliminates emotion (subjectivity) from the stock selection (and selling) decision process.

You should also remember that the people who did well with MI will be over-represented in the responses you get ... human nature being what it is.


P.S. I also use a simple rule (reviewed once each month) for moving money into and out of my 401k plan (administered by Fidelity) and its IRR for 2001 was +8%.

P.P.S. MI has caused me to buy stock in companies that I otherwise would never consider ... I really disliked it when HRB bought Olde Discount Brokerage, raised commissions twice and encouraged my broker to start offering me a lot of "advice" about what to buy and sell. That merger was a key reason that we moved all of our money over to Brown & Co. Anyway, we bought HRB on 7/5/01 and sold it on 2/11/02 ... very sweet.
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