Comments on: Magic Formula Update – First “Purchase” of 2008

By: Dave in Vancouver

Dave in Vancouver — Thu, 17 Apr 2008 22:59:29 +0000

Ray I hope you keep posting your results. I started today with 4 purchases. I think I will try 25 to 30 purchases over the next year, at 4k each. I will follow the formula for 4 years from today. I will not put any more money in until I have good gains. When I look at the stocks, it looks scary, but that keeps everyone from trying it.

By: Tom

Tom — Wed, 02 Apr 2008 00:32:00 +0000

Any updates. I am finishing the 5 Little books. They are good reads but differ in some concepts. I would love to see if you had any comments of the other books.

By: Ray

Ray — Fri, 11 Jan 2008 23:17:11 +0000

You’re welcome. After a year, I sold the ones that disappeared from the top 25. The ones sold gained 33%. Overall, the highest gain was 24% around August. As I said, overall right now including the ones sold, it’s down 10%. The ones I’m still holding are down 18%. The book said the mix never lost money in any three-year period. Hope these averages work out. My minimum was $50 million and small stocks have been hammered. By buying 30 stocks, the attempt is to mirror the averages. The issue is that stocks are cheap for a reason (hopefully it’s not all due to the cockroach theory where if there’s one, there’s probably hundreds more). So I’m betting on the averages per the book working out with good companies regaining their value.

By: Phil

Phil — Thu, 10 Jan 2008 23:45:13 +0000

Thanks for sharing your experiment, I just read the book recently and am very much interested in the subject matter. It ‘ll be interesting to see how your experiment plays out in year two. Good luck and keep the updates coming.

By: Ray

Ray — Wed, 09 Jan 2008 23:50:55 +0000

I started 16 months ago buying 6 stocks every 2 months for 10 months since September 2006. I’ve been selling and buying new ones after holding them for about a year. So far, I am down 10% overall. The strategy is supposed to be long-term so short-term results are not supposed to mean anything.

By: Money Blue Book

Money Blue Book — Wed, 09 Jan 2008 19:53:44 +0000

Curious to see how the magic formula turns out…always skeptical of such predictors though..
-Raymond

By: Traciatim

Traciatim — Wed, 09 Jan 2008 19:26:30 +0000

Hey JLP, I really like this series. It’s nice to the the magic formula in action. This is an approach I have been very interested in. I’ll probably end up like the commenter suggested above and just index, but hopefully I’ll have some play money to do things like this one day.

By: JLP

JLP — Wed, 09 Jan 2008 18:53:30 +0000

Spokane Al,

True enough. But,… this is an experiment.

By: Spokane Al

Spokane Al — Wed, 09 Jan 2008 18:48:26 +0000

You sales and purchases of individual stocks are interesting. That said, I think perhaps it would be a bit more prudent to take that $3k and invest in a broad based mutual fund and then set up an auto invest program to dollar cost average over the years. You might do better rather than buying and selling a small dollar value of indivual equities each year.