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Staying resolute is getting harder and harder. On top of that, working in the oilfield has made financial planning a bit more ‘interesting’ with no more earned income and a very poor employment outlook in the near term. I’m torn as to whether or not to let my MFI portfolio run out and then move the money elsewhere. But that has been value investing all around when it has taken such a beating over the past decade or so – stay or abandon ship? The longer I stay invested in MFI the closer and closer the results start to look like they are reverting to the mean. That’s not necessarily a horrible thing since long-term I don’t mind matching the market. Based on the last 5 years results, I feel like my results over the long-term will start trailing the market returns for some time unless there is a significant run up in the price of value stocks (or alternately the values stocks hold steady and growth stock prices drop.)

The returns of my portfolio versus those of several Russell indexes through 31-Mar-2020 are as follows:

Portfolio Inception Date IRR R3000 R2000
Real Money 02-Feb-2006 +9.22% +8.44 +6.23

The following table details performance (IRR) over various time frames through the end of the quarter:
Portfolio 10 year 5 year 3 year 1 year
Real Money +14.38 +4.00 +0.32 -1.28
R3000 +13.72 +10.03 +10.04 +6.53
R2000 +10.50 +4.29 +2.01 -6.63

I no longer have any tracking portfolios. I have an idea where I might get some historical data based on Gotham portfolios and use that to construct a tracking portfolio. That’s still a project for another time.

Interestingly, I noticed recently that Gotham is promoting another concept now on the MFI website, Invest5. Details can be found at Looks like it basically is investing small amounts every day in an enhanced Gotham S&P500 fund and allowing compounding to work its magic over the long-term.

Still working to stay resolute, but wavering,
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No. of Recommendations: 2
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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