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Greetings for the 'swell' start to 2016 in the markets. Last year wasn’t that spectacular in the greater scheme of things. The major markets were mostly reported to be flat, and the same goes for my MFI portfolio. I only lost a little bit. On a much more positive note, MFI continued as the bright spot of my overall investment portfolio. The rest of my portfolio was down overall about 9.5% or so – primarily due to a large allocation to international stocks and the energy sector.

The returns of my portfolio versus those of several Russell indexes through 31-Dec-2015 are as follows:

Portfolio Inception Date IRR R3000 R2000
Real Money 02-Feb-2006 +10.39% +5.71 +5.91

The following table details performance (IRR) over various time frames through 31-Dec-2015:

Portfolio 7 year 5 year 3 year 1 year
Real Money +12.63 +14.01 +19.35 -0.91
R3000 +12.94 +10.98 +12.76 -0.92
R2000 +14.01 +9.19 +11.65 -1.20

The 1-year returns are a bit hokey when I looked at the index returns. These are the numbers I originally got and when I checked them on Jan 4th they showed closer to -4%. Please take them with a grain of salt and/or do your own due diligence. My personal returns I feel pretty comfortable with – both Quicken and my brokerage show nearly identical IRR over various time frames.

I also have several tracking portfolios that I maintain on Marketocracy as additional 'data points'. These were started on various dates using free data sources available from the internet. These portfolios are rebalanced annually near the date of inception with a small component left as cash to 'pay' expenses. Only portfolios with at least one year of history are included. The annualized returns of these portfolios versus those of several Russell indexes through 31-Dec-2015 are as follows:

Portfolio Inception Date IRR R3000 R2000
MFI 20-Mar-2006 +6.06 +6.92 +5.82
Fidelity 20-Mar-2006 +1.36 +6.92 +5.82
Yahoo 21-Mar-2006 +2.72 +6.93 +5.83
FinViz 30-Mar-2011 -2.95 +11.54 +8.31
MG1 08-Jan-2012 +10.83 +14.76 +12.54
SCHW 18-Mar-2012 -1.53 +12.48 +10.13

I have not made any significant changes to my overall investment strategies and continue to maintain my MFI portfolio percentage at roughly the same level as in the past. Outside of MFI, I did move money from cash into international equities to maintain their asset allocation after those sectors lost money last year.



R3000 and R2000 are the internal rates of return for the Russell3000® and the Russell 2000® Indexes, respectively, over the given time period.

My self-managed account consists of four groups of 10 stocks each that were purchased and spaced out about 3 months apart. The picks are from the MFI website and selected from the top 50 and then run through a list randomizer. The first 10 on the list that I did not previously own are selected for the next cycle. They are rebalanced/shuffled/changed out on their respective anniversaries. I do not continue hold stocks that are still on the list or buy the same stock that is held in the other three cycles.

Marketocracy fund notes:

Only the MFI portfolio uses actual magic formula stocks picked from the website. All the other portfolios use the general screening option method outlined in the book to pick your own stocks using ROA and P/E ratios. The MG1 portfolio consists of the 30 highest ranked stocks from M.Gerda who posts about MFI on his blog. There were several funds that may have somewhat incorrect overall returns due to an error in Marketocracy's software. These portfolios held a position that was acquired for cash and did not reflect in the transactions in a timely fashion (or possibly correctly).
The free Yahoo screener that I used for many years no longer exists to generate new portfolios starting in 2015. As a result the Yahoo portfolio is now cobbled together using a list of profitable companies (P/E > 0) and market cap above 250M and then data is gathered using the SMF add-in from Yahoo. This is an effort to try and keep the data stream as pure as possible.
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