It has been a long lonely stretch for value investors. Growth, disruptors, amazon-effect all have driven certain stocks to the moon and left many profitable, though steady-state stocks behind.
I am old enough to have heard this chorus before. In 1995-2000 the dot com frenzy caused "new economy" stocks to be bid up and "old economy" stocks to wither away. Guess what? The productivity advances driven by fiber-optic cables, by cheaper and faster computers all combined to help old economy stocks make more money while spending less.
And I'd argue the same is true today. The cloud is saving old economy stocks money. Faster, cheaper and better software is helping old economy stocks manage businesses better. Targeted advertising, while helping FB and Google also give old economy stocks more bang for their advertising dollar.
Yes there have been some difficulties for retailers. But problems for some are opportunities for others. Circuit City going out of business is good for Best Buy. Perhaps Toys R Us bankruptcy is good for Wal Mart. Perhaps JCP (I was in a JCP the other day... there is a reason they are disappearing - yuck!) and Sears finally riding off into sunset is good for WalMart or Kohls.
My MFI Formula Portfolio
My MFI Formula Portfolio, like the MFI Index is really doing well lately. All of a sudden, earnings seem to matter. RHI popped on good earnings. HSII popped the other day on good earnings. TUP, HRB, VIAB and DIN are all having nice runs. Guess what? Making money is actually better that making money aspirationally (shout out to TSLA).
Look at my MFI Formula month by month movement assuming $100,000 in it initially:
| Date | Differential | Value | R3K Value |
| 10/1/2014 | 0.00% | 100,000 | 100,000 |
| 11/1/2014 | 1.63% | 102,288 | 100,658 |
| 12/1/2014 | 0.30% | 101,375 | 101,075 |
| 1/1/2015 | -0.33% | 100,664 | 100,995 |
| 2/1/2015 | 1.67% | 101,281 | 99,611 |
| 3/1/2015 | 3.62% | 106,073 | 102,454 |
| 4/1/2015 | 5.09% | 106,781 | 101,695 |
| 5/1/2015 | 5.78% | 107,859 | 102,077 |
| 6/1/2015 | 5.08% | 108,213 | 103,134 |
| 7/1/2015 | 4.82% | 106,423 | 101,604 |
| 8/1/2015 | 3.71% | 107,112 | 103,404 |
| 9/1/2015 | 4.38% | 101,523 | 97,139 |
| 10/1/2015 | 6.39% | 100,703 | 94,312 |
| 11/1/2015 | 2.93% | 104,835 | 101,907 |
| 12/1/2015 | -3.48% | 99,443 | 102,926 |
| 1/1/2016 | -3.36% | 96,830 | 100,012 |
| 2/1/2016 | -0.72% | 93,797 | 94,367 |
| 3/1/2016 | 4.07% | 98,588 | 94,367 |
| 4/1/2016 | 0.34% | 102,371 | 101,548 |
| 5/1/2016 | -1.91% | 99,774 | 101,200 |
| 6/1/2016 | -0.42% | 103,145 | 103,568 |
| 7/1/2016 | -0.19% | 103,022 | 103,216 |
| 8/1/2016 | 2.56% | 109,419 | 106,857 |
| 9/1/2016 | -0.34% | 106,704 | 107,048 |
| 10/1/2016 | -0.85% | 106,377 | 107,230 |
| 11/1/2016 | 0.42% | 105,421 | 105,003 |
| 12/1/2016 | 1.62% | 110,705 | 109,088 |
| 1/1/2017 | 1.57% | 113,406 | 111,832 |
| 2/1/2017 | 1.32% | 114,809 | 113,486 |
| 3/1/2017 | -5.09% | 112,930 | 118,024 |
| 4/1/2017 | -1.86% | 116,227 | 118,091 |
| 5/1/2017 | 1.11% | 120,403 | 119,296 |
| 6/1/2017 | -2.65% | 117,824 | 120,472 |
| 7/1/2017 | -2.40% | 119,144 | 121,545 |
| 8/1/2017 | -1.96% | 121,873 | 123,828 |
| 9/1/2017 | -6.09% | 117,879 | 123,973 |
| 10/1/2017 | -2.56% | 124,448 | 127,007 |
| 11/1/2017 | -3.85% | 125,890 | 129,739 |
| 12/1/2017 | -0.97% | 132,616 | 133,585 |
| 1/1/2018 | -3.63% | 131,460 | 135,086 |
| 2/1/2018 | -4.87% | 136,978 | 141,848 |
| 3/1/2018 | 3.96% | 140,586 | 136,622 |
| 4/1/2018 | -0.16% | 133,734 | 133,898 |
| Current | 4.78% | 138,740 | 133,958 |
You can see the portfolio went nowhere from June 2015 until November 2016 (when Trump won). Since then up a respectable 33% and now leading the bench mark by over 4 points. Not a rout, but the trend does seem to be our friend as I think/believe "The Times They Are A-Changin'"
Posts
No comments:
Post a Comment