Say Good Bye To 2018

Say Good-Bye To 2018

It was not a good year for me on the investing front.  Terrible in fact.  I will publish final numbers tomorrow, but I have been "diving" this past quarter.

But, as I have said before... a drop in the market actually can be good if you are a net buyer of stocks.  If you make the assumption that the stock market will be X in 2030, irregardless of how it gets there - then you are better off to have some drops along the way and use those as buying (not selling) opportunities.  And I have been selling nothing.

I read a great blog this mornings that comments that this quarter was the 14th worst quarter since 1926.  Guess what?  The five year return after the 13 worse quarters on average has been +91%.  It is no fun going through these bumpy times, but a longer term view really can be invaluable.  Here is a link to that blog (
Buying When Stocks Are Down Big).

My Baker's Dirty Dozen

As a reminder, on 12/21 I created a Baker's Dirty Dozen stock list, of stocks I felt had been way oversold during 2018.  So far, they have done well since I created list:

Stock	Start	Current	Dividend	Gain/Loss
AMCX	52.23	54.72	-	4.8%
AMAT	30.31	32.38	-	6.8%
DLX	37.11	38.34	-	3.3%
DXC	50.48	52.95	-	4.9%
KLAC	85.67	88.63	-	3.5%
LRCX	127.16	135.42	-	6.5%
MU	30.32	31.57	-	4.1%
SGH	28.75	29.64	-	3.1%
WDC	35.90	36.74	-	2.3%
ECA	5.38	5.82	-	8.2%
GLNG	21.72	21.63	-	-0.4%
T	28.31	28.46	-	0.5%
TGP	11.82	10.80	-	-8.6%
Total				3.0%

I do believe there is gold in them thar hills for those with the courage to find it.  I would not go "all in", always best to keep some powder dry as stocks can always drop more.  But if you have a 3 to 5 year time horizon and you buy quality names, my belief is that everything will be alright.

Have a safe and happy New Year!

New MFI Formula Tranche (Dry Run)

New MFI Formula Tranche (Dry Run)

Next Wednesday I will be replacing my January 1st MFI Formula tranche.  As my readers know, I have 4 MFI Formula tranches (each at quarter start/close dates).  Each tranche consists of 5 MFI stocks that I buy and hold for a year.

For my MFI Formula portfolio, I have a filtering/formulaic approach.  I thought it might be helpful if I do a dry run so readers can see how I pick the five stocks.

Before I do that though, a quick shout out to the tranche about to call it a wrap:

1/2/2018	Start	Current	Dividend	Pct Gain	R3K Gain
AMGN	$177.11	$190.33	$5.28	10.4%	-6.6%
GME	$18.06	$12.18	$1.52	-24.1%	-6.6%
GILD	$71.64	$62.94	$1.71	-9.8%	-6.6%
HRB	$26.34	$25.12	$0.99	-0.9%	-6.6%
OMC	$72.81	$72.15	$1.80	1.6%	-6.6%
Totals				-4.5%	-6.6%

Hard to be excited about down 4.5%.  But I wish my entire portfolio was down just 4.5% in 2018.  No stinkers (stocks down 30% or more), although GME gave it a run.

Now on to new tranche (dry run).

Step 1

First I run the official screen.  I have been running 50 stocks at 133m.  I will continue that in 2019.

Ticker	Market Cap	Price	Dividend	Yield
ACOR	740	14.85	-	0.00%
AEIS	1,604	42.69	-	0.00%
ALSN	5,552	43.63	0.60	1.38%
AMAT	29,568	31.55	0.80	2.54%
AGX	590	37.59	1.00	2.66%
HRB	5,105	25.12	0.99	3.95%
BPT	423	20.25	5.29	26.14%
CECO	797	11.20	-	0.00%
CASA	1,056	12.69	-	0.00%
CELG	43,681	62.81	-	0.00%
CJREF	678	3.21	0.24	7.48%
DLX	1,801	38.44	1.20	3.13%
DXC	14,663	53.44	0.76	1.42%
ESIO	1,039	29.95	-	0.00%
FTSI	740	6.76	-	0.00%
GME	1,267	12.18	1.52	12.50%
GILD	81,933	62.94	2.28	3.63%
EAF	3,376	11.31	0.23	2.07%
HSII	579	31.19	0.52	1.67%
HPQ	31,633	20.38	0.58	2.84%
IDT	143	5.99	0.37	6.18%
IMMR	272	8.77	-	0.00%
INVA	1,898	16.96	-	0.00%
IDCC	2,250	65.85	1.42	2.15%
IPG	7,822	20.41	0.84	4.12%
KLAC	13,172	88.30	2.83	3.21%
LRCX	20,993	133.28	3.79	2.84%
LGORF	1,090	2.08	-	0.00%
LTRPA	1,187	15.89	-	0.00%
MCFT	349	18.40	-	0.00%
MSB	310	23.70	2.79	11.77%
MKSI	3,324	63.22	0.78	1.24%
MSGN	1,723	22.92	-	0.00%
NHTC	219	19.80	0.58	2.94%
NKTR	5,673	33.17	-	0.00%
EGOV	815	12.31	0.32	2.59%
OMC	16,093	72.15	2.40	3.32%
PETS	490	23.93	1.04	4.35%
STX	10,847	38.44	2.52	6.55%
SIGA	569	7.00	-	0.00%
SP	640	28.56	-	0.00%
STRL	285	10.25	-	0.00%
TVTY	992	24.92	-	0.00%
TUP	1,566	31.57	2.72	8.61%
HEAR	207	14.59	-	0.00%
UIS	577	11.41	-	0.00%
UTHR	4,979	105.30	-	0.00%
VEC	236	21.45	-	0.00%
VIAB	10,589	25.89	0.80	3.10%
WDC	10,673	36.89	2.00	5.42%

Step 2

Exclude stocks with yield under 2.4%.

Number	Ticker	Market Cap	Price	Dividend	Yield
1	AMAT	29,568	31.55	0.80	2.54%
2	AGX	590	37.59	1.00	2.66%
3	HRB	5,105	25.12	0.99	3.95%
4	BPT	423	20.25	5.29	26.14%
5	CJREF	678	3.21	0.24	7.48%
6	DLX	1,801	38.44	1.20	3.13%
7	GME	1,267	12.18	1.52	12.50%
8	GILD	81,933	62.94	2.28	3.63%
9	HPQ	31,633	20.38	0.58	2.84%
10	IDT	143	5.99	0.37	6.18%
11	IPG	7,822	20.41	0.84	4.12%
12	KLAC	13,172	88.30	2.83	3.21%
13	LRCX	20,993	133.28	3.79	2.84%
14	MSB	310	23.70	2.79	11.77%
15	NHTC	219	19.80	0.58	2.94%
16	EGOV	815	12.31	0.32	2.59%
17	OMC	16,093	72.15	2.40	3.32%
18	PETS	490	23.93	1.04	4.35%
19	STX	10,847	38.44	2.52	6.55%
20	TUP	1,566	31.57	2.72	8.61%
21	VIAB	10,589	25.89	0.80	3.10%
22	WDC	10,673	36.89	2.00	5.42%

Step 3

Exclude stocks with market cap under 740m (the 16 smallest stocks from original pull).

Number	Ticker	Market Cap	Price	Dividend	Yield
1	AMAT	29,568	31.55	0.80	2.54%
2	HRB	5,105	25.12	0.99	3.95%
3	DLX	1,801	38.44	1.20	3.13%
4	GME	1,267	12.18	1.52	12.50%
5	GILD	81,933	62.94	2.28	3.63%
6	HPQ	31,633	20.38	0.58	2.84%
7	IPG	7,822	20.41	0.84	4.12%
8	KLAC	13,172	88.30	2.83	3.21%
9	LRCX	20,993	133.28	3.79	2.84%
10	EGOV	815	12.31	0.32	2.59%
11	OMC	16,093	72.15	2.40	3.32%
12	STX	10,847	38.44	2.52	6.55%
13	TUP	1,566	31.57	2.72	8.61%
14	VIAB	10,589	25.89	0.80	3.10%
15	WDC	10,673	36.89	2.00	5.42%

Step 4

Throw out one name if desired.  While this is a formulaic approach, I do allow myself the optionality to throw out one name.  I am trying to remove my biases, so I should not throw out a name just because I don't like it... it should be because I don't believe past 12 month income is reflective (at all) of future income.  In this event, I have wearied of GME... but will not throw it out.

Step 5

Run a random number generator to pick 5 names.

Random #	Stock
6	HPQ
2	HRB
3	DLX
9	LRCX
10	EGOV

I do plan in 2019 to continue to divert a larger and larger part of my overall money into MFI.  I have not decided how much yet.  But I do believe it works for me.