Hello Magic Formula People! I recently finished updating my Magic Formula stocks. It’s my third round of buying or selling stocks of 30 companies identified by Joel Greenblatt’s Magic Formula Investing site. Here is my current portfolio, reflecting my latest update:
Things have improved quite a bit since my last post, but I’ve still lost money on this scheme. While the S&P 500 Index has increased in value about 20% since I started just over 2 years ago, my Magic Formula Portfolio has lost a few thousand dollars.
One of the issues of buying this round of stocks was identified in my post on the stickiness of formula stocks. It was sometimes a struggle to find stocks that I had not yet invested in. I therefore reinvested in some companies that were previously in the portfolio, such as H&R Block. Most of my previous stocks lost money, but some of the ones that increased in value, such as AMC Networks (AMCX), are still on the site a year after I bought them. I was more likely to keep these stocks rather than the sticky stocks that dropped substantially in value. But a problem with keeping the winners is that it can lead to imbalances of the portfolio.
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