I write this on Saturday, February 6th, 2021. Gamestop closed at $63.77 yesterday, down from a high of about $483 just over a week ago. But even the current price is WAY higher than when I bought the stock as part of my Magic Formula portfolio just over four years ago on Jan 27th, 2017. I paid $24.13, and sold the stock for $16.75 a year later. The stock went gradually down from there until it’s recent upsurge.
But Gamestock stayed on Joel Greenblatt’s magicformulainvesting screener for years. It’s not there now of course, and I don’t know when it stopped appearing on the screener. Frankly, I was disgusted seeing Gamestop continuously on the screener as the stock slowly but surely decreased in price. My inclination was to not re-invest in a MF stock if I’d already lost a lot of money on it, and instead pick another one. I’ve since adapted my strategy to just randomly pick from among the screener stocks that I don’t currently own, regardless whether I’ve owned the stock before, and regardless of how much I made or lost on it.
AMC Networks (AMCX) is another Magic Formula stock still appearing on the screener that has also been affected by the Reddit group WallStreetBets. I’m in the process of another round of replacing my Magic Formula stocks, and I recently bought AMCX. I admit I was blissfully unaware of all the brouhaha when I bought the stock on January 11th for $39.71. Now it’s trading for just under $47. Unless its price blows up like Gamestop to some ridiculous, life-changing amount I’m going to stick to the strategy and hang on to it for the full year.
I’ll post a portfolio update soon. The heart of the matter right now is that my Magic Formula Portfolio (dividends included) has earned me about 18% return in four years, while investing in an S&P 500 index fund or ETF would have earned me over 67% return on my investment not even including the dividends.
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