The markets have been showing a little pop this week on the bad news is good news adage. As growth is more and more anemic, it is less and less likely we get interest rates raised. And that is good, right?
You have found your way to the MFI Diary, a blog where I let readers know my thoughts and performance on real life, real dollar Magic Formula Portfolios (based of course on "The Little Book The Beats The Market" by Joel Greenblatt. I also spend some effort tracking hypothetical portfolios based on downloads from the official website going back to January 2006.
Of course, I have to have a disclaimer - I am just a guy with a spreadsheet and not a stock advisor. You should do your own due diligence before acting on anything you read here.
Getting ready for my summer vacation - head next week down to Miami to start a 7 day cruise. I may not even blog. I have my summer reading all set:
- American Gods
- The Leftovers
- The Force
- Beneath a Scarlet Sky
- His Bloody Project
- A Gentleman in Moscow
- Dead Companies Walking
- Red Notice
I am about 20% into American Gods - very good so far.
Past Week
Dow is at an all time high. There seems so much euphoria. I am getting more defensive. I am at all-time high in my cash balance. I have shifted $ from speculative stocks to dividend stocks. Then I am buying positions that have only moderate upside, but limited downside (at least in my view).
I continue to underperform the market. I am tempted to not even show this anymore. I am trying to beat the market with my two MFI portfolios - but my cash position, dividend/safety focus make my overall results unlikely to beat the market as long as market is going up. I am 57 and I am not really going for glory in my investing, but rather want to make sure I preserve capital.
| Component | YTD |
| Overall | +8.05% |
| Select | +13.84% |
| Formula | +5.44% |
| Miscellaneous | -2.58% |
| Dividend | +9.58% |
| R3K | +10.29% |
| MFI Index | +2.89% |
You can see the MFI Index is struggling and GARIX (Gotham mutual fund) is up 2.4%. So I am pleased with performance of my Select and Formula portfolios as in this table they also have a 20%ish cash component.
MFI Select
As the name suggests, this is my MFI portfolio where I allow myself free reign to pick whatever "value" stocks I want. It can be from the official website screens or from my own workbook where I create a top 200 at least once a month. I rebooted this approach in August 2012 (I licked my wounds in August 2011 when I stopped for a year and re-considered my strategy/approach).
Here is how MFI Select has down month by month (assuming I began with $100,000):
| Date | Differential | MFI Value | R3K Value |
| 12/1/2012 | -2.20% | 99,765 | 101,965 |
| 1/1/2013 | -1.78% | 102,798 | 104,575 |
| 2/1/2013 | -2.26% | 102,594 | 104,856 |
| 3/1/2013 | -2.23% | 102,881 | 105,114 |
| 4/1/2013 | -0.43% | 106,804 | 107,234 |
| 5/1/2013 | 2.00% | 110,423 | 108,423 |
| 6/1/2013 | 4.75% | 115,831 | 111,085 |
| 7/1/2013 | 4.29% | 114,888 | 110,597 |
| 8/1/2013 | 6.91% | 124,799 | 117,889 |
| 9/1/2013 | 10.46% | 124,536 | 114,079 |
| 10/1/2013 | 19.67% | 138,655 | 118,990 |
| 11/1/2013 | 19.75% | 143,514 | 123,764 |
| 12/1/2013 | 23.70% | 150,105 | 126,405 |
| 1/1/2014 | 26.63% | 157,138 | 130,503 |
| 2/1/2014 | 24.70% | 150,619 | 125,918 |
| 3/1/2014 | 25.66% | 158,116 | 132,458 |
| 4/1/2014 | 30.38% | 162,991 | 132,616 |
| 5/1/2014 | 29.65% | 162,428 | 132,779 |
| 6/1/2014 | 31.44% | 167,001 | 135,559 |
| 7/1/2014 | 39.23% | 177,971 | 138,740 |
| 8/1/2014 | 31.13% | 167,054 | 135,922 |
| 9/1/2014 | 35.90% | 177,792 | 141,892 |
| 10/1/2014 | 29.38% | 168,321 | 138,944 |
| 11/1/2014 | 26.14% | 168,810 | 142,666 |
| 12/1/2014 | 30.22% | 176,420 | 146,198 |
| 1/1/2015 | 28.17% | 174,306 | 146,140 |
| 2/1/2015 | 20.63% | 162,833 | 142,201 |
| 3/1/2015 | 25.15% | 175,476 | 150,324 |
| 4/1/2015 | 29.95% | 178,565 | 148,612 |
| 5/1/2015 | 37.31% | 186,655 | 149,348 |
| 6/1/2015 | 51.53% | 202,897 | 151,371 |
| 7/1/2015 | 62.69% | 211,437 | 148,743 |
| 8/1/2015 | 40.75% | 192,117 | 151,369 |
| 9/1/2015 | 36.41% | 178,603 | 142,195 |
| 10/1/2015 | 43.12% | 181,175 | 138,052 |
| 11/1/2015 | 69.02% | 217,959 | 148,936 |
| 12/1/2015 | 73.49% | 223,435 | 149,946 |
| 1/1/2016 | 63.33% | 209,514 | 146,186 |
| 2/1/2016 | 49.49% | 187,428 | 137,934 |
| 3/1/2016 | 56.48% | 194,415 | 137,934 |
| 4/1/2016 | 47.34% | 195,770 | 148,430 |
| 5/1/2016 | 46.38% | 194,301 | 147,923 |
| 6/1/2016 | 51.44% | 201,999 | 150,558 |
| 7/1/2016 | 50.41% | 201,092 | 150,680 |
| 8/1/2016 | 52.72% | 207,223 | 154,501 |
| 9/1/2016 | 67.04% | 222,481 | 155,446 |
| 10/1/2016 | 42.98% | 198,563 | 155,582 |
| 11/1/2016 | 41.86% | 195,726 | 153,863 |
| 12/1/2016 | 45.92% | 202,775 | 156,859 |
| 1/1/2017 | 45.60% | 209,503 | 163,936 |
| 2/1/2017 | 45.20% | 212,330 | 167,146 |
| 3/1/2017 | 48.80% | 222,583 | 173,829 |
| 4/1/2017 | 55.70% | 229,473 | 173,735 |
| 5/1/2017 | 55.80% | 231,497 | 175,712 |
| 6/1/2017 | 53.40% | 230,599 | 177,203 |
| 7/1/2017 | 60.28% | 239,060 | 178,782 |
| Current | 62.66% | 243,997 | 181,337 |
So to go in what is now almost 5 years from $100,000 to almost $244,000 is good. And you can see just in 2017 it has gone from 209,503 to the 244,000. A $34,000 gain - that is pushing 15%.
Here are the 4 tranches of 5 stocks each:
| 8/15/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| CSCO | $31.20 | $31.42 | $1.10 | 4.2% | 14.5% |
| GNC | $19.79 | $8.04 | $0.38 | -57.5% | 14.5% |
| VLO | $54.73 | $68.04 | $2.00 | 28.0% | 14.5% |
| MSGN | $16.68 | $23.00 | $0.00 | 37.9% | 14.5% |
| GILD | $79.33 | $70.57 | $1.98 | -8.5% | 14.5% |
| Totals | 0.8% | 14.5% | |||
| 11/15/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| MPAA | $26.55 | $28.07 | $0.00 | 5.7% | 14.3% |
| ATHM | $22.61 | $47.48 | $0.00 | 110.0% | 14.3% |
| AMGN | $145.14 | $177.13 | $2.00 | 23.4% | 14.3% |
| RHI | $43.23 | $49.05 | $0.70 | 15.1% | 14.3% |
| CA | $31.11 | $34.48 | $0.51 | 12.5% | 14.3% |
| Totals | 33.3% | 14.3% | |||
| 2/1/2017 | Start | Current | Dividend | Pct Gain | R3K Gain |
| AKRX | $19.10 | $33.65 | $0.00 | 76.2% | 8.3% |
| YY | $41.08 | $63.79 | $0.00 | 55.3% | 8.3% |
| KLAC | $85.11 | $99.64 | $1.08 | 18.3% | 8.3% |
| WNC | $17.65 | $22.51 | $0.06 | 27.9% | 8.3% |
| RGR | $52.75 | $60.20 | $0.92 | 15.9% | 8.3% |
| Totals | 38.7% | 8.3% | |||
| 5/6/2017 | Start | Current | Dividend | Pct Gain | R3K Gain |
| WSTC | $24.15 | $23.33 | $0.00 | -3.4% | 2.8% |
| TGNA | $25.75 | $22.70 | $0.07 | -11.6% | 2.8% |
| TIME | $15.05 | $14.10 | $0.04 | -6.0% | 2.8% |
| MSGN | $23.55 | $23.00 | $0.00 | -2.3% | 2.8% |
| QCOM | $54.93 | $56.81 | $0.57 | 4.5% | 2.8% |
| Totals | -3.8% | 2.8% |
So two dud tranches, but two very good tranches. A 50% success rate will work so long as you get some big wins. Of course I harp all the time that my approach is to avoid "stinkers", meaning stocks that end up declining 30% or more. These are very prevalent in MFI screens (over 10%) and my goal is to reduce that failure rate to more like 5%. You will note just one stinker: GNC in August. But it illustrates how a single stinker can really ruin a 5 stock tranche.
Here is overall table:
| Category/Tranche | August | November | February | May | Total |
| Initial Investment | 25,000 | 25,000 | 25,000 | 25,000 | 100,000 |
| Current Tranche | 0.8% | 33.3% | 38.7% | -3.8% | 18.5% |
| Previous Tranche | 2.8% | 8.0% | 10.7% | 19.1% | 8.9% |
| Tranche -2 | 11.2% | 69.4% | -14.3% | -25.2% | 10.3% |
| Tranche -3 | 41.4% | 14.2% | 8.5% | 18.3% | 20.6% |
| Tranche -4 | 14.1% | 43.7% | 78.3% | 33.0% | 42.3% |
| MFI Overall Gain | 86.0% | 300.7% | 154.5% | 34.8% | 144.0% |
| Current Balance | 46,488 | 100,176 | 63,631 | 33,702 | 243,997 |
| R3K Current Tranche | 14.5% | 14.3% | 8.3% | 2.8% | 10.0% |
| R3K Overall Gain | 91.3% | 94.8% | 75.3% | 63.9% | 81.3% |
| R3K Balance | 47,829 | 48,710 | 43,814 | 40,983 | 181,337 |
| Annualized IRR | 13.4% | 34.7% | 23.4% | 7.4% | 19.7% |
Still at that snappy (and feeling unsustainable) annualized IRR over 19%.
Finally, here are stocks during the week:
| Stock | Last Week | Current | Dividend | Change |
| ATHM | 45.97 | 47.48 | - | 3.3% |
| MSGN | 22.75 | 23.00 | - | 1.1% |
| AKRX | 33.55 | 33.65 | - | 0.3% |
| YY | 56.83 | 63.79 | - | 12.2% |
| AMGN | 171.43 | 177.13 | - | 3.3% |
| RHI | 49.17 | 49.05 | - | -0.2% |
| CA | 34.34 | 34.48 | - | 0.4% |
| MPAA | 27.84 | 28.07 | - | 0.8% |
| WNC | 22.06 | 22.51 | - | 2.0% |
| QCOM | 55.35 | 56.81 | - | 2.6% |
| KLAC | 94.57 | 99.64 | - | 5.4% |
| RGR | 61.70 | 60.20 | - | -2.4% |
| WSTC | 23.31 | 23.33 | - | 0.1% |
| TGNA | 23.00 | 22.70 | - | -1.3% |
| TIME | 14.00 | 14.10 | - | 0.7% |
| VLO | 68.18 | 68.04 | - | -0.2% |
| CSCO | 30.90 | 31.42 | - | 1.7% |
| GILD | 69.25 | 70.57 | 1.9% | |
| GNC | 8.33 | 8.04 | -3.5% | |
| Average | 1.5% |
My two Chinese stocks, YY and ATHM continue to be superb.
MFI Formula
Here I also have 4 tranches of 5 stocks. But these are picked by formula and random number generator. I actually started a new tranche this past week. I have been using this approach since October 2014. It has been lukewarm in success thus far - although it has worked very well in my backtesting.
| 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 |
| Current | -3.65% | 119,619 | 123,265 |
| 10/3/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| CPLA | $58.15 | $86.50 | $1.23 | 50.9% | 15.3% |
| LDOS | $43.01 | $53.24 | $0.96 | 26.0% | 15.3% |
| GME | $27.70 | $21.02 | $1.13 | -20.0% | 15.3% |
| PBI | $18.15 | $15.48 | $0.56 | -11.6% | 15.3% |
| CSCO | $31.72 | $31.42 | $1.10 | 2.5% | 15.3% |
| Totals | 9.6% | 15.3% | |||
| 12/30/2016 | Start | Current | Dividend | Pct Gain | R3K Gain |
| GILD | $71.69 | $70.57 | $1.04 | -0.1% | 10.2% |
| HPQ | $15.00 | $18.42 | $0.40 | 25.5% | 10.2% |
| TGNA | $21.33 | $22.70 | $0.21 | 7.4% | 10.2% |
| CA | $31.99 | $34.48 | $0.51 | 9.4% | 10.2% |
| SYNT | $19.79 | $16.72 | $0.00 | -15.5% | 10.2% |
| Totals | 5.3% | 10.2% | |||
| 4/1/2017 | Start | Current | Dividend | Pct Gain | R3K Gain |
| BKE | $18.45 | $16.60 | $0.50 | -7.3% | 4.4% |
| CSCO | $33.76 | $31.42 | $0.58 | -5.2% | 4.4% |
| GILD | $67.50 | $70.57 | $0.52 | 5.3% | 4.4% |
| OMC | $85.53 | $81.28 | $0.55 | -4.3% | 4.4% |
| SYNT | $16.76 | $16.72 | $0.00 | -0.2% | 4.4% |
| Totals | -2.4% | 4.4% | |||
| 7/1/2017 | Start | Current | Dividend | Pct Gain | R3K Gain |
| CSCO | $30.98 | $31.42 | $0.00 | 1.4% | 1.4% |
| GME | $20.95 | $21.02 | $0.00 | 0.3% | 1.4% |
| HPQ | $17.60 | $18.42 | $0.00 | 4.7% | 1.4% |
| RGR | $60.70 | $60.20 | $0.00 | -0.8% | 1.4% |
| SYNT | $16.21 | $16.72 | $0.00 | 3.1% | 1.4% |
| Totals | 1.7% | 1.4% |
You can see the newest tranche (says 7/1, but actually 7/10) is off to decent start. But other three open tranches are trailing.
| Category/Tranche | October | January | April | July | Total |
| Initial Investment | 249,820 | 249,939 | 250,180 | 249,728 | 999,667 |
| Current Tranche | 9.6% | 5.3% | -2.4% | 1.7% | 2.9% |
| Previous Tranche | 5.5% | 9.3% | 25.2% | 26.7% | 16.6% |
| Tranche -2 | 0.5% | 11.0% | -0.2% | -12.5% | -0.3% |
| MFI Overall Gain | 16.1% | 27.8% | 21.9% | 12.8% | 19.7% |
| Current Balance | 290,071 | 319,316 | 305,005 | 281,795 | 1,196,187 |
| R3K Current Tranche | 15.3% | 10.2% | 4.4% | 1.4% | 7.8% |
| R3K Overall Gain | 30.2% | 23.1% | 21.9% | 18.0% | 23.3% |
| R3K Balance | 325,267 | 307,770 | 304,863 | 294,735 | 1,232,635 |
| Annualized IRR | 5.5% | 10.1% | 9.0% | 6.1% | 7.7% |
| Stock | Last Week | Current | Dividend | Change |
| SYNT | 16.16 | 16.72 | - | 3.5% |
| CSCO | 30.90 | 31.42 | - | 1.7% |
| HPQ | 17.35 | 18.42 | - | 6.2% |
| GILD | 69.25 | 70.57 | - | 1.9% |
| GME | 20.91 | 21.02 | - | 0.5% |
| CA | 34.34 | 34.48 | - | 0.4% |
| TGNA | 23.00 | 22.70 | - | -1.3% |
| OMC | 81.50 | 81.28 | - | -0.3% |
| CPLA | 85.05 | 86.50 | - | 1.7% |
| BKE | 17.40 | 16.60 | 0.25 | -3.2% |
| RGR | 61.70 | 60.20 | - | -2.4% |
| LDOS | 52.07 | 53.24 | - | 2.2% |
| PBI | 14.95 | 15.48 | - | 3.5% |
| - | ||||
| Average | 1.1% |
SYNT and CSCO are in multiple tranches and are becoming more "important" to my results.
Dividend and Miscellaneous
As I mentioned at outset, I am pulling back my $ in Misc, which is probably for the best as it is the worst performer for me. I am increasing $ in dividend and I did add some new names.
| Stock | Initial | Current | Div/Sh | Gain/Loss | Yield |
| FDEU | 18.40 | 18.84 | 0.24 | 4% | 7.7% |
| JQC | 8.20 | 8.50 | 0.54 | 10% | 7.4% |
| ISBC | 13.15 | 13.14 | - | 0% | 2.4% |
| TK | 5.24 | 7.09 | - | 35% | 3.1% |
| SBRA | 23.53 | 23.24 | 0.29 | 0% | 7.4% |
| KCLI | 49.19 | 50.34 | - | 2% | 2.4% |
| PSXP | 48.20 | 51.22 | - | 6% | 4.6% |
| NRZ | 16.22 | 15.52 | 0.38 | -2% | 12.9% |
| TGONF | 10.47 | 12.95 | 1.97 | 42% | 5.3% |
| LADR | 12.88 | 13.15 | - | 2% | 9.1% |
| DHF | 3.34 | 3.49 | 0.07 | 6% | 9.3% |
| RILY | 13.85 | 19.25 | - | 39% | 1.7% |
| DSL | 18.49 | 20.85 | 1.86 | 23% | 8.6% |
| FSFR | 8.92 | 8.76 | - | -2% | 8.7% |
| O | 25.02 | 56.25 | 20.25 | 206% | 4.5% |
| OIBAX | 5.09 | 5.86 | 2.39 | 62% | 4.0% |
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