Magic Formula Results

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dchamber
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Magic Formula Results

Post by dchamber » Tue Aug 14, 2018 11:22 am

Has anyone really tried the Magic Formula, from Grennblatt's "The Little Book That Beats the Market"?

I have seen several posts but nothing definitive and long-term. People seem to give up after a years or so.

I started using it on 1/4/2007, so I am in it for just over 11 years. I do it in a SEP IRA account and that's all I have done in this account. I think this is a good long term sample size. It contains the recession and the recent growth period. Some picks have been delisted and some have shown amazing growth.


As of 8/14/2014 I have average 8.91% annualized. Over this period, the S&P made 6.16%, the DOW 6.27%, and the NASDAQ 10.55%. I beat the S&P and DOW, but not the NASDAQ. I could have just bought the NASDAQ but I am sure it has losing spans and I am diversified across sectors (I hope by the random picks).
Some years I made contributions and I hope I account for this correctly in my calculation.


This gains are not near as good as the claims in the book. I am beating some indexes, but am I 'beating the market'? How do I define market?


In the first few years I tried to cherry pick from the list. Now I just pick randomly like the book recommends. I will avoid super-low volume when I don't think the trade will go through.

I am not very good at selling at exactly the 1 year mark. My buys have clumped around 2 dates, about half in May and the other half in December. This causes me to forget about it. When I closed 15 positions in May I held some cash and started buying 2 stocks a month. I think if I can get on a monthly plan I will be better about selling near the 1 year mark. I have still not found out how to stay balanced with this many transactions.


Should I be satisfied with this rate?
Years ago I averaged 27% annualized over 3 years doing special situations (odd-lot tenders, buy backs, going privates). That spoiled me, but those deals dried up during the recession. It was very time consuming and my portfolio was tiny (<10k to start). I don't think I want to get back into all that work, and I don't think it works with larger portfolios (over $50k or so).

I would like to hear other experiences with the magic formula. Is there anything better for this level of work?
Last edited by dchamber on Wed Aug 15, 2018 12:00 am, edited 1 time in total.

PFInterest
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Re: Magic Formula Results

Post by PFInterest » Tue Aug 14, 2018 5:22 pm

no idea what that is.

if you have a SEP it should all be tracked and easy to see annualized returns.

otherwise you can XIRR the data.

kind of pointless to not include the 11 years you have....

common misconception. you should benchmark your portfolio against a similar index.

Masterblaster
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Re: Magic Formula Results

Post by Masterblaster » Tue Aug 14, 2018 5:46 pm

Has anyone really tried the Magic Formula, from Grennblatt's "The Little Book That Beats the Market"?
Seeking Alpha did a detailed evaluation of this technique. It's perhaps more than you asked for but nonetheless a very comprehensive analysis.

To Conclude

Both classes of the Magic Formula have done quite well since 1999. In addition to experiencing very attractive returns, they boast of high base rates and attractive long-term rolling results. Generally Large Cap experienced higher returns with less volatility than its Large/Mid Cap cousin.

On a less statistical basis, the stocks in this screen are typically well-known stocks, many of which may be household names. For those investors who feel better knowing what they are purchasing, this strategy may have you covered in that department.

As was hinted in the introduction bullets, some single factor strategies have done better over time than the Magic Formula, but with more volatility. One such strategy is the low EV/EBIT strategy.


https://seekingalpha.com/article/402753 ... ic-formula

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Re: Magic Formula Results

Post by bgf » Tue Aug 14, 2018 6:23 pm

I enjoyed his book but use his site only as a screener. so far, only one stock, IBM, was an underperformer for me. all others outperformed. meaning all others I actually invested in. one of which, EBIX, I've remained fully invested in and have added along the way. I'm impressed you stuck with the strategy for so long.
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Re: Magic Formula Results

Post by nisiprius » Tue Aug 14, 2018 6:55 pm

When I first learned about it, I said "if it's really a formula and it really works, why doesn't someone embody it in the form of a mutual fund?" In 2011, Greenblatt did just that, launching:

Formula Investing U.S. Value Select (FNSAX)
Formula Investing International Value Select (FNAAX)
Formula Investing U.S. Value 1000 (FVVAX)
Formula Investing International Value 400 (FNVAX)

As of July 2015, not one of them had outperformed the S&P 500 index.

All were shut down shortly thereafter and don't exist any more. (That makes it nontrivial to find their performance data and compare them with what might be a more appropriate benchmark than the S&P 500).
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Re: Magic Formula Results

Post by stlutz » Tue Aug 14, 2018 7:22 pm

I don't know that I have much to add, but this thread is so cool! It's so rare that we have real life examples of using a stock-picking strategy for this long (11 years).

:sharebeer

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galeno
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Re: Magic Formula Results

Post by galeno » Tue Aug 14, 2018 7:25 pm

The backtest does not include real portfolio costs: commissions, bid/ask spreads, and taxes. Once you add these the strategy falls apart.
AA = 40/55/5. Expected CAGR = 3.8%. GSD (5y) = 6.2%. USD inflation (10 y) = 1.8%. AWR = 4.0%. TER = 0.4%. Port Yield = 2.82%. Term = 33 yr. FI Duration = 6.0 yr. Portfolio survival probability = 95%.

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k66
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Re: Magic Formula Results

Post by k66 » Tue Aug 14, 2018 7:34 pm

dchamber wrote:
Tue Aug 14, 2018 11:22 am
Has anyone really tried the Magic Formula, from Grennblatt's "The Little Book That Beats the Market"?
...
As of 8/14/2011 I have average 8.91% annualized. Over this period, the S&P made 6.16%, the DOW 6.27%, and the NASDAQ 10.55%. I beat the S&P and DOW, but not the NASDAQ. I could have just bought the NASDAQ but I am sure it has losing spans and I am diversified across sectors (I hope by the random picks).
...
This gains are not near as good as the claims in the book. I am beating some indexes, but am I 'beating the market'? How do I define market?
Are you beating the indexes? Perhaps. But should you not also be comparing your, what I assume is a total return (e.g. a return which includes potential dividends and trading costs) against the total return of the chosen index? Are the figures that you posted for S&P500, DJIA, and Nasdaq total returns or price-only returns?

It is common to refer to the "market" as "all investable stocks". Possible indexes to use include S&P1500, Russell 3000, or Wilshire 5000... or just simply "everything" via Vanguard's ETF "VTI".

S&P 1500 Index

Russell 3000 Index

Wilshire 5000 Index
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Jeff Albertson
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Re: Magic Formula Results

Post by Jeff Albertson » Tue Aug 14, 2018 7:36 pm

Greenblatt's funds are in the Gotham Fund group: https://www.gothamfunds.com/Default.aspx
their "index plus" fund: https://www.gothamindexplus.com/

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asset_chaos
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Re: Magic Formula Results

Post by asset_chaos » Tue Aug 14, 2018 8:36 pm

As noted these magic formula fellows have their gotham hedge funds. The short 3 year record for their enhanced S&P 500 index fund (GINDX) is successful so far over its short life in some sense, in that it's beaten the 500 index by a couple of percent a year so far. On the other hand, GINDX, says M*, has been so much more volatile that it's 3 year Sharpe ratio is below that of the index (1.07 vs 1.13). Extrapolate that as you will to the future.

Gotham also has a net 60% long stock fund (GARIX) whose 6 year lifetime record trails balanced index fund. Or the nearly 6 year record of GENIX, net 100% long stocks, that trails total stock market.

Stock picking and market timing are hard to do consistently and successfully.

Not exactly covering their investors in glory, but those three funds do have some $2.5 billion in assets at around 3% fee level. Their business seems to do alright for itself.
Regards, | | Guy

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Re: Magic Formula Results

Post by Nate79 » Tue Aug 14, 2018 10:53 pm

dchamber wrote:
Tue Aug 14, 2018 11:22 am
Has anyone really tried the Magic Formula, from Grennblatt's "The Little Book That Beats the Market"?

I have seen several posts but nothing definitive and long-term. People seem to give up after a years or so.

I started using it on 1/4/2007, so I am in it for just over 11 years. I do it in a SEP IRA account and that's all I have done in this account. I think this is a good long term sample size. It contains the recession and the recent growth period. Some picks have been delisted and some have shown amazing growth.


As of 8/14/2011 I have average 8.91% annualized. Over this period, the S&P made 6.16%, the DOW 6.27%, and the NASDAQ 10.55%. I beat the S&P and DOW, but not the NASDAQ. I could have just bought the NASDAQ but I am sure it has losing spans and I am diversified across sectors (I hope by the random picks).
Some years I made contributions and I hope I account for this correctly in my calculation.


This gains are not near as good as the claims in the book. I am beating some indexes, but am I 'beating the market'? How do I define market?


In the first few years I tried to cherry pick from the list. Now I just pick randomly like the book recommends. I will avoid super-low volume when I don't think the trade will go through.

I am not very good at selling at exactly the 1 year mark. My buys have clumped around 2 dates, about half in May and the other half in December. This causes me to forget about it. When I closed 15 positions in May I held some cash and started buying 2 stocks a month. I think if I can get on a monthly plan I will be better about selling near the 1 year mark. I have still not found out how to stay balanced with this many transactions.


Should I be satisfied with this rate?
Years ago I averaged 27% annualized over 3 years doing special situations (odd-lot tenders, buy backs, going privates). That spoiled me, but those deals dried up during the recession. It was very time consuming and my portfolio was tiny (<10k to start). I don't think I want to get back into all that work, and I don't think it works with larger portfolios (over $50k or so).

I would like to hear other experiences with the magic formula. Is there anything better for this level of work?
Did you mean 8/14/2018, not 2011?

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Re: Magic Formula Results

Post by AlphaLess » Tue Aug 14, 2018 11:06 pm

PFInterest wrote:
Tue Aug 14, 2018 5:22 pm
you should benchmark your portfolio against a similar index.
YUP!
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stlutz
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Re: Magic Formula Results

Post by stlutz » Tue Aug 14, 2018 11:14 pm

The obsession with "What is the proper benchmark" is interesting. For me, I would either be picking my own stocks or I'd be investing mostly in total market index funds (I once did the former; now I do the later). For me, the proper benchmark is vs. what the alternative was. If the OP would otherwise just by SPY or VTI, well, then those are the proper benchmarks for him.

OP: Somebody did inquire about dividends. I'm assuming you've included those in your personal returns? By my calculations, I think they were omitted from the index results you quoted. If I include dividends, I think you're basically matching the broader market. That's definitely not a bad outcome (I'm happy with it as an index fund investor), but it doesn't seem to be what you are after either.

Lots of us know from experience: Beating the market is hard.

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dchamber
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Re: Magic Formula Results

Post by dchamber » Tue Aug 14, 2018 11:58 pm

k66 wrote:
Tue Aug 14, 2018 7:34 pm
dchamber wrote:
Tue Aug 14, 2018 11:22 am
Has anyone really tried the Magic Formula, from Grennblatt's "The Little Book That Beats the Market"?
...
As of 8/14/2011 I have average 8.91% annualized. Over this period, the S&P made 6.16%, the DOW 6.27%, and the NASDAQ 10.55%. I beat the S&P and DOW, but not the NASDAQ. I could have just bought the NASDAQ but I am sure it has losing spans and I am diversified across sectors (I hope by the random picks).
...
This gains are not near as good as the claims in the book. I am beating some indexes, but am I 'beating the market'? How do I define market?
Are you beating the indexes? Perhaps. But should you not also be comparing your, what I assume is a total return (e.g. a return which includes potential dividends and trading costs) against the total return of the chosen index? Are the figures that you posted for S&P500, DJIA, and Nasdaq total returns or price-only returns?

It is common to refer to the "market" as "all investable stocks". Possible indexes to use include S&P1500, Russell 3000, or Wilshire 5000... or just simply "everything" via Vanguard's ETF "VTI".

S&P 1500 Index

Russell 3000 Index

Wilshire 5000 Index
That is a good point.
For my numbers I just use portfolio balance so it includes dividends. But for the indexes I am just using the prices. How could I get data for the index annualized rate including dividends?

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dchamber
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Re: Magic Formula Results

Post by dchamber » Wed Aug 15, 2018 12:01 am

Nate79 wrote:
Tue Aug 14, 2018 10:53 pm
dchamber wrote:
Tue Aug 14, 2018 11:22 am
Has anyone really tried the Magic Formula, from Grennblatt's "The Little Book That Beats the Market"?

I have seen several posts but nothing definitive and long-term. People seem to give up after a years or so.

I started using it on 1/4/2007, so I am in it for just over 11 years. I do it in a SEP IRA account and that's all I have done in this account. I think this is a good long term sample size. It contains the recession and the recent growth period. Some picks have been delisted and some have shown amazing growth.


As of 8/14/2011 I have average 8.91% annualized. Over this period, the S&P made 6.16%, the DOW 6.27%, and the NASDAQ 10.55%. I beat the S&P and DOW, but not the NASDAQ. I could have just bought the NASDAQ but I am sure it has losing spans and I am diversified across sectors (I hope by the random picks).
Some years I made contributions and I hope I account for this correctly in my calculation.


This gains are not near as good as the claims in the book. I am beating some indexes, but am I 'beating the market'? How do I define market?


In the first few years I tried to cherry pick from the list. Now I just pick randomly like the book recommends. I will avoid super-low volume when I don't think the trade will go through.

I am not very good at selling at exactly the 1 year mark. My buys have clumped around 2 dates, about half in May and the other half in December. This causes me to forget about it. When I closed 15 positions in May I held some cash and started buying 2 stocks a month. I think if I can get on a monthly plan I will be better about selling near the 1 year mark. I have still not found out how to stay balanced with this many transactions.


Should I be satisfied with this rate?
Years ago I averaged 27% annualized over 3 years doing special situations (odd-lot tenders, buy backs, going privates). That spoiled me, but those deals dried up during the recession. It was very time consuming and my portfolio was tiny (<10k to start). I don't think I want to get back into all that work, and I don't think it works with larger portfolios (over $50k or so).

I would like to hear other experiences with the magic formula. Is there anything better for this level of work?
Did you mean 8/14/2018, not 2011?
I did mean 2014. I have updated it.

tesuzuki2002
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Re: Magic Formula Results

Post by tesuzuki2002 » Wed Aug 15, 2018 12:42 am

dchamber wrote:
Tue Aug 14, 2018 11:22 am
Has anyone really tried the Magic Formula, from Grennblatt's "The Little Book That Beats the Market"?

I have seen several posts but nothing definitive and long-term. People seem to give up after a years or so.

I started using it on 1/4/2007, so I am in it for just over 11 years. I do it in a SEP IRA account and that's all I have done in this account. I think this is a good long term sample size. It contains the recession and the recent growth period. Some picks have been delisted and some have shown amazing growth.


As of 8/14/2014 I have average 8.91% annualized. Over this period, the S&P made 6.16%, the DOW 6.27%, and the NASDAQ 10.55%. I beat the S&P and DOW, but not the NASDAQ. I could have just bought the NASDAQ but I am sure it has losing spans and I am diversified across sectors (I hope by the random picks).
Some years I made contributions and I hope I account for this correctly in my calculation.


This gains are not near as good as the claims in the book. I am beating some indexes, but am I 'beating the market'? How do I define market?


In the first few years I tried to cherry pick from the list. Now I just pick randomly like the book recommends. I will avoid super-low volume when I don't think the trade will go through.

I am not very good at selling at exactly the 1 year mark. My buys have clumped around 2 dates, about half in May and the other half in December. This causes me to forget about it. When I closed 15 positions in May I held some cash and started buying 2 stocks a month. I think if I can get on a monthly plan I will be better about selling near the 1 year mark. I have still not found out how to stay balanced with this many transactions.


Should I be satisfied with this rate?
Years ago I averaged 27% annualized over 3 years doing special situations (odd-lot tenders, buy backs, going privates). That spoiled me, but those deals dried up during the recession. It was very time consuming and my portfolio was tiny (<10k to start). I don't think I want to get back into all that work, and I don't think it works with larger portfolios (over $50k or so).

I would like to hear other experiences with the magic formula. Is there anything better for this level of work?

If you run your baseline examples from 2008 until now the annualized return of the S&P500 is 12% +

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k66
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Re: Magic Formula Results

Post by k66 » Wed Aug 15, 2018 12:48 am

dchamber wrote:
Tue Aug 14, 2018 11:58 pm
k66 wrote:
Tue Aug 14, 2018 7:34 pm
dchamber wrote:
Tue Aug 14, 2018 11:22 am
Has anyone really tried the Magic Formula, from Grennblatt's "The Little Book That Beats the Market"?
...
As of 8/14/2011 I have average 8.91% annualized. Over this period, the S&P made 6.16%, the DOW 6.27%, and the NASDAQ 10.55%. I beat the S&P and DOW, but not the NASDAQ. I could have just bought the NASDAQ but I am sure it has losing spans and I am diversified across sectors (I hope by the random picks).
...
This gains are not near as good as the claims in the book. I am beating some indexes, but am I 'beating the market'? How do I define market?
Are you beating the indexes? Perhaps. But should you not also be comparing your, what I assume is a total return (e.g. a return which includes potential dividends and trading costs) against the total return of the chosen index? Are the figures that you posted for S&P500, DJIA, and Nasdaq total returns or price-only returns?

It is common to refer to the "market" as "all investable stocks". Possible indexes to use include S&P1500, Russell 3000, or Wilshire 5000... or just simply "everything" via Vanguard's ETF "VTI".

S&P 1500 Index

Russell 3000 Index

Wilshire 5000 Index
That is a good point.
For my numbers I just use portfolio balance so it includes dividends. But for the indexes I am just using the prices. How could I get data for the index annualized rate including dividends?
Try Yahoo! Finance--this link provides a chart for the "S&P 500 Total Return (TR)" index. Other TR indexes available as well, but I think the S&P500 TR is going to be pretty close to the other broad market indexes.

In the past four years (Aug. 15, 2014 to Aug. 14, 2018), the S&P 500 TR is up a total of 53% -- approx. 11.3% per annum simply compounded. If you decided to invest in (say) a S&P 500 index fund, you would have management fees, trading fees, and possible tax implications, so you might still be in the 10% to 11% range depending on your variables & costs.
LOSER of the Boglehead Contest 2015 | lang may yer lum reek

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Mursili
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Re: Magic Formula Results

Post by Mursili » Wed Aug 15, 2018 9:08 am

I used the magic formula for about as long as you did. The difference is that I had it in an account with other activity and I have not had the time to compare the results of that portion of the account with any index. I enjoyed the learning experience of owning the individual stocks and dealing with those issues, but, just this year, I liquidated those positions and put it all in FSTVX.

I just don't have the time to own equities in any form other than a few mutual funds anymore. There is too much to do in life. Still, I am going to hope my kids read Greenblatt's book - but way after they have read a lot more about investing like a Boglehead.
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magicrat
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Re: Magic Formula Results

Post by magicrat » Wed Aug 15, 2018 9:14 am

dchamber wrote:
Wed Aug 15, 2018 12:01 am
Nate79 wrote:
Tue Aug 14, 2018 10:53 pm
dchamber wrote:
Tue Aug 14, 2018 11:22 am
Has anyone really tried the Magic Formula, from Grennblatt's "The Little Book That Beats the Market"?

I have seen several posts but nothing definitive and long-term. People seem to give up after a years or so.

I started using it on 1/4/2007, so I am in it for just over 11 years. I do it in a SEP IRA account and that's all I have done in this account. I think this is a good long term sample size. It contains the recession and the recent growth period. Some picks have been delisted and some have shown amazing growth.


As of 8/14/2011 I have average 8.91% annualized. Over this period, the S&P made 6.16%, the DOW 6.27%, and the NASDAQ 10.55%. I beat the S&P and DOW, but not the NASDAQ. I could have just bought the NASDAQ but I am sure it has losing spans and I am diversified across sectors (I hope by the random picks).
Some years I made contributions and I hope I account for this correctly in my calculation.


This gains are not near as good as the claims in the book. I am beating some indexes, but am I 'beating the market'? How do I define market?


In the first few years I tried to cherry pick from the list. Now I just pick randomly like the book recommends. I will avoid super-low volume when I don't think the trade will go through.

I am not very good at selling at exactly the 1 year mark. My buys have clumped around 2 dates, about half in May and the other half in December. This causes me to forget about it. When I closed 15 positions in May I held some cash and started buying 2 stocks a month. I think if I can get on a monthly plan I will be better about selling near the 1 year mark. I have still not found out how to stay balanced with this many transactions.


Should I be satisfied with this rate?
Years ago I averaged 27% annualized over 3 years doing special situations (odd-lot tenders, buy backs, going privates). That spoiled me, but those deals dried up during the recession. It was very time consuming and my portfolio was tiny (<10k to start). I don't think I want to get back into all that work, and I don't think it works with larger portfolios (over $50k or so).

I would like to hear other experiences with the magic formula. Is there anything better for this level of work?
Did you mean 8/14/2018, not 2011?
I did mean 2014. I have updated it.
So for you to demonstrate that this strategy works you have to cherry pick your time period and compare total return of the strategy vs. price change only of the market (no dividends)? Am I missing something?

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Re: Magic Formula Results

Post by LadyGeek » Wed Aug 15, 2018 3:53 pm

I removed an off-topic post and several replies. As a reminder, see: General Etiquette
We expect this forum to be a place where people can feel comfortable asking questions and where debates and discussions are conducted in civil tones.

...At all times we must conduct ourselves in a respectful manner to other posters.
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Re: Magic Formula Results

Post by arcticpineapplecorp. » Wed Aug 15, 2018 8:30 pm

Welcome to the group. I haven't used the "magic formula" myself. I will only pick apart some of your own words in an attempt to guess as to why the strategy may not be working and why you sound frustrated.
dchamber wrote:
Tue Aug 14, 2018 11:22 am
I have seen several posts but nothing definitive and long-term. People seem to give up after a years or so.

I started using it on 1/4/2007, so I am in it for just over 11 years.

I think this is a good long term sample size. It contains the recession and the recent growth period.
I don't. Yes, 11 years is definitely longer than "a few years or so" but that doesn't in and of itself make it "a good long term sample size". Just because you say it "contains the recession and the recent growth period" doesn't make it a good long term sample size. One recession or one growth period is not the same as every recession and every growth period going back to 1926 or whatever). So how do you draw an assumption from a sample size of one? Here's a few examples:

There was a previous post debating the benefit of the "small cap" premium showed that while it outperformed over many periods, if an investor started investing in small caps after a certain year (and I believe it was some year in the early 1970s) the small cap premium basically disappeared. And that was over the next few decades. If you started one year before, you'd have captured the premium. So these periods are highly dependent on starting and ending years. And sometimes it can take more than 11 years to tell if a strategy pays off.

Here's another example: Growth stocks beat value stocks for most of the 90s. That didn't mean the value strategy didn't work. It required patience for it to pay off (which it did in the early 2000s when value came back).

And one final example: Investing in the total stock market offers lousy returns because investing in the stock market from 2000-2009 was a lost decade and 10 years is a long time to see that investing in stocks should have paid off, right? :oops:

This is the problem with the magic formula or any such formula. If you don't have the conviction of sticking with your strategy for life, then you'll probably abandon ship right before the returns show up (and you won't get them). I'm not telling you to stick with this formula. But whatever you decide to do, whether it's tilt to small cap/value or whatever, you've got to stick with it or you'll get worse returns usually by abandoning the ship and chasing whatever new formula comes your way.

11 years is a blip. Investing is a marathon, not a sprint. If you are fortunate enough to start investing in your 20s and retire in your 60s and live to your 90s that's 70 years (20-90) of investing. Makes an 11 year span seem like small potatoes, because it is.
dchamber wrote:
Tue Aug 14, 2018 11:22 am
This gains are not near as good as the claims in the book. I am beating some indexes, but am I 'beating the market'? How do I define market?
How does one define the market? Good question. Usually it's global right? Where all the money is in the world would be the total market. That's about 50% US and 50% international. My opinion is you shouldn't even be trying to beat the market. I used to say the goal of investing isn't to beat the market. It's to beat inflation. Think about that. So many attempt to beat the market, only to underperform it. Sad. The market's performance is available to all if everyone would just own it. But they don't. They try to beat it. Evidence shows the longer you try to beat the market, the more likely you are to underperform it (usually due to costs, timing, behavioral mistakes, etc). So I'm not sure why you want to beat the market. Only you can answer that.
dchamber wrote:
Tue Aug 14, 2018 11:22 am
In the first few years I tried to cherry pick from the list. Now I just pick randomly like the book recommends. I will avoid super-low volume when I don't think the trade will go through.
I'm not sure what the book recommends, because I haven't read it. But if there's some random picking going on, then not everyone is going to get the same returns even if they are following the same strategy. So if you're picking at random, doesn't that mean some will do better than others just by definition that not everyone's picking the same stocks at the same time at the same price? There will naturally be deviation. Perhaps others did better than you. But was that just due to random selection and nothing more? If so, you have to admit that this stock picking business is more random (that is, due to luck) than actual strategy and as Larry Swedroe says, "You should never confuse outcome with strategy".
dchamber wrote:
Tue Aug 14, 2018 11:22 am
I am not very good at selling at exactly the 1 year mark. My buys have clumped around 2 dates, about half in May and the other half in December. This causes me to forget about it. When I closed 15 positions in May I held some cash and started buying 2 stocks a month. I think if I can get on a monthly plan I will be better about selling near the 1 year mark. I have still not found out how to stay balanced with this many transactions.
So could some of the problem be that you're not following the strategy as you were directed to? Your words here indicate you've been kind of sloppy/lazy with regards to implentation of the strategy. Could that be at least partly the reason why you're not getting the returns you expect?

Reading through your post and the mechanics makes my head hurt a little. No it doesn't seem like it's worthwhile, but only you can determine that. I'd much rather invest the boring way and get on with life. You have to choose how you want to spend your time.

I wrote more about the magic formula here: viewtopic.php?t=225850#p3497168

You said you read the prior posts at bogleheads. I think it might be worthwhile reading again. Especially this part:
by arcticpineapplecorp. » Thu Aug 17, 2017 7:57 pm

I'm not encouraging you to continue the magic formula. It's probably not right for you (or most). There's nothing wrong with that. Someone once said it's important to know your limitations. Many here have tried different things over the years and finally realized they should have stopped playing with their money and just own the market for as little as possible. When you have that epiphany, it's a game changer. You won't agonize (as much). You'll be able to get on with your life (the important stuff) and investing will be effortless (not all this buying and selling stuff every year).

The magic formula has been provided to you. Own as diversified a portfolio as you can (sector, size, style, stock, country), have enough bonds and cash to sleep well at night/dampen volatility, invest as much as you can for as long as you can and keep expenses (including taxes) as low as you can. What could possibly be better than that? Why does everyone continue to think they're above average?
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

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