Been a tough ride in 2008. I think it is just not the time for smaller value stocks. They'll have their day, but as Buffett says the market is a voting machine in the short term and a weighing machine in the long term. The votes right now are against small cap value, but that doesn't mean the system doesn't work.
Had two interesting experiences with stocks reporting same store sales:
HGG - announced their same store sales were up 3% for the quarter ending in December (hhgregg Reports 3.0% Comparable Store Sales Increase for the Third Quarter and Reaffirms Earnings Guidance for the Year Ended March 31, 2008). In addition, the reaffirmed guidance. Their reward? The stock has dropped from $12.65 to $9.74. I don't have a calculator right now, but that is pushing a 25% drop.
AEO - announced a 2% drop in same store sales this evening during happy hour. In additiona they dropped their guidance by a couple of cents (American Eagle Dec. same-store sales fall 2%). This evening after hours they are up about 4.5%. Talk about low expectations!
My sole good news this week has been KG... it is good to be king. They settled a patent lawsuit (King Pharma's Golden Deal) and the market liked what they saw. They shot up 16% on Tuesday.
Despite the slow start, I do still have faith in the approach and will just chill while I let it work. I am convinced after going through all my stocks that I have a decent portfolio. It simply will not melt away into nothingness like the bubble stocks of 1999.
If anyone wants a good graphic representation of the past year, click on my marketocracy links in the left margin. I have about 6 MFI portfolios all started about a year ago.
Finally, recall at the start of the year I rated all my stocks 1,2 and 3. So far (it is early though) my calls were spot on. My 1's have held up the best and my 3's (led by HGG) have been hammered.
I won't be showing my graphs or results for a few weeks until things stabilize. I don't want anyone getting nauseous.
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4 comments:
Hey,
Just wanted to say I admire that you are sticking to your plan with the MFI stocks. Greenblatt said many times that it may underperform for years- and you chose to get it right after small cap value was going out of vogue. Just keep that in mind as your portfolio struggles a bit right now. Keep up the good work.
Translation from Jeff: SUCKER!!
Just kidding. Marsh, I actually went on Marketocracy looking for some good graphing tools after your recommendation. It's probably me, but is there a way to input past trades into a portfolio there? It seemed like the only way for me to do it was on a going forward basis (i.e. as if I wanted to buy some stock today at the current price). A simple yes or no as to the question would be helpful, and I will try to dig down some more and figure out the way.
Thanks.
Albert,
I do not know anyway to input past trades in MC. You can't even enter trades today at a price you want, it is driven by price the time you buy as they try and mimic a mutual fund manager.
Signed,
Sucker
Marsh,
Been following your blog for about 8 months not and finally decided to sign up and post. I read Greenblatt's book last January and started my MFI investing in Feb '07with much excitement. Like you my faith in the MFI formula is now being put to the test. I have two different portfolios, one is down 17% while the other consisting only of companies with a minimum market cap of $1 billion is down a modest 2%. I am curious as to when you started following the MFI strategy. Looking for someone who has actually used it for more than a year that has experienced some good results. Actually, I am looking for some morale support that will prevent me from bailing before I even give it a chance to work.
Keep up the great work with the blog, I really enjoy your post.
Steve from Cols, Ohio
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