Monday, June 28, 2010

Taking a Step Away from MFI

After 4.5 years and sitting at a 10% net loss, I am starting to decide that MFI is not for me... certainly not at the large scale I have been in it. This is real money. I know I have not followed the "rules" exactly, but that is not the reason I am down. If you had randomly invested over the period of time I got in over the MFI stock listing (100m and greater) and followed the rules exactly, you would be very close to me. I know this as I can super-impose my timing of initial investments against my monthly tracking portfolios.

Anyway, I think MFI crashes worse in bear markets and I don't have the stomach for another go as I had to battle back significantly from my hole during the 7/2007-3/2009 crash.

I will keep the blog going for a while and I will continue my tracking efforts and my stock contest. I will still invest in a basket of stocks from the MFI lists, but I am going to be at least 50% in cash and will generally be getting defensive (think PM, RAI and CEL). Then I intend to put more $ with experts (I like the Hussmann funds). If we get to more "normal" times, I will certainly revisit the approach. I think conceptually MFI works and it has "outperformed", albeit a net decrease. At my age and at my personal financial position, I need to start thinking more about income producing investments and keeping what I have as I have fewer years to rebuild.

I think the final blow was the overall realization of how much more fragile the stock markets and global economies are today than they have been in past recessions. It is almost scary, when you look at the European meltdowns, Japan's political and financial problems and the printing presses in the states. There is just way to much debt and the tools (outside of massive devaluation) are not there to deal with it globally. Toss in higher taxes in the pipe, high unemployment and total political hatred between parties in DC and you gotta start thinking safe havens in my shoes.

7 comments:

許紀廷 said...

死亡是悲哀的,但活得不快樂更悲哀。......................................................................

Homer315 said...

Did you read Hussman's latest market commentary yesterday? It's very scary. Let's hope to God he's wrong.

http://www.hussmanfunds.com/wmc/wmc100628.htm

AndrewsDad said...

Somewhat surprised... that I am surprised. Kind of saw this coming but come on... its Marsh.... the keeper of the MFI flame.

Without knowing a lot more of your situation, age, income, savings, dependents etc. I can't judge and even if I did know those things, I would not judge. It is your money, you do with it anything you want, nobody else has a say.. listening to Atlas Shrugged on CD.

Been struggling myself with the whole MFI thing. Personally I think it is more of an overall market issue than MFI. I am really, really nervous about a complete market meltdown with all of the debt and such which is part of the reason I am less than 50% in stocks with the rest in cash sitting in a brokerage account. Then I see some interview with Buffet saying cash is never the place to be. You can't make money sitting on the sidelines, you should not try to time the bottom, get in when others are getting out, etc.

Time will tell I guess if in fact MFI eventually delivers on the promise, which so far I do not believe it has, if this is an example of what Greenblatt was saying when he said some will not stick with it which is why in the long run it will work. Or if M.G. is smarter than the average bear.

Either way, I wish you the best, have enjoyed reading the blog and the Yahoo group posts, hope they do not go completely away.

Marsh_Gerda said...

couple quick responses - there is no doubt the Hussmann article pushed me over the brink. I was already at the edge as people may have noticed on recent posts.

Then regarding Buffett's comment about staying invested. That seems a little disingenuous as he holds buckets of cash when he can't find things at prices he finds attractive.

AndrewsDad said...

I would say Buffett would respond if you find a good company whose value appears more than the current price, you buy it regardless of the current market conditions. If you can't, don't buy. Berkshire obviously has lots of cash coming in through earnings and dividends so I am sure they always have cash in the account and I am sure sometimes they are more or less willing to buy companies depending on how things are going but it is my understanding, and I am in no way a Buffett expert, Berkshire has done really well getting in when things looked bad and getting out when things seemed to be heading to the moon.

Kind of like the well known market indicator, the number of posts to the Yahoo MFI group.

靜宸靜宸 said...

成熟,就是有能力適應生活中的模糊。.................................................................

陳登陽 said...

人有兩眼一舌,是為了觀察倍於說話的緣故。............................................................