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My Magic Formula Experiment
As I stated in my last post, I am willing to give Joel Greenblatt the benefit of the doubt with the system that he has proposed in his book. Even Joel admits that it sounds too simple to be a successful strategy!
I visited his website at www.magicformulainvesting.com and signed up. I then selected the top 25 companies with a minimum market capitalization of $100 million.
Here are the selections that were provided to me.
My plan is to watch these 25 stocks over the next year and then sell them once the year is over. Joel recommends that 5-7 stocks are purchased at a time until all your stocks are purchased. But I have assumed that all 25 were purchased on the same day.
Hopefully this stock selection method will prove as successful as Joel makes it sound in his book. Now he does stress that you must be willing to continue on with this stock selection method for at least 3 years.
Let’s watch this portfolio together and see how it does.
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Hi,
I’m doing a similar test however on European stock markets.
November 13th, 2007 at 5:17 pmI have been providing lists with Magic formula selected stock, a virtual and a real portfolio for over a year now.
For the most of the year the MF stocks did great, beating the market with over 4% however now it is reduced to only 1.
But as you said let’s see in 3 years.
By the way I like your analisys, I hope one day I find the time to do the same for European stocks.