We are five years in people! In February of 2017, when shares of the SPY ETF were selling for $231.51, I wrote, “If my portfolio is not beating this common investment after five years, I’ll consider this experiment a failure because I could have saved myself a lot of trouble by simply buying a low-cost index fund or ETF.” Well, the bad news, is: the experiment is a failure, so far. The good (?) news is, I’m not giving up yet.
The SPY is now trading for about $432.17, which means a return of nearly 87% over 5 years for those who bought the ETF a little over five years ago. Contrast that with my Magic Formula Portfolio, which returned nearly 31% over the same time period. Note that the Portfolio had been doing well over the past year or so, but got killed recently, as did the overall market, due mainly to a certain Russian dictator who decided he wanted to take over Ukraine. I’ll blame Putin for my Portfolio’s decline in value since my last update. Easy come, easy go. What’s worse, I’m not including the SPY’s dividends in its performance. Doing so would have made the gap even wider. Dividends are included in my Portfolio performance. Another factor: my Portfolio is held in a retirement account, which means I pay no taxes on gains when I sell the stocks. If I did, my Portfolio’s performance would be even worse. Comparing this update with the original Portfolio, one interesting thing is, despite how I’m always complaining about the stickiness of MF stocks, only two company’s ticker symbols in the original Portfolio are in my current Portfolio: Lifevantage (LFVN), a B.S. Multi-level Marketing company (aka “Pyramid Scheme”), and H&R Block (HRB). Shares of LFVN have decreased in value during that time, while HRB’s have risen.
Don’t worry readers; I’m not going to end this experiment just yet. Not that I believe that Greenblatt’s strategy will beat the market or anything. I’m simply too lazy to decide what else to do with the money right now.