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Old 09-22-2014, 07:00 AM   #21
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Yes, I placed market order. Putting in limit orders won't help though I think. The volatility is not of that kind.

For example one company tanked 30% in one week after announcing they lost a major contract (LQDT). Same thing with Ruger - they couldn't keep up with the hype sales growth of the past years.

After those swings they tend to hold steady. Again, just 10 stocks for half a year, so anecdotal at most. Some others aren't going anywhere, and yet others have been steadily climbing. In aggregate roughly break-even.

It's just basic small company behavior I guess: relatively small events can cause huge swings in value, both inherent and perceived. Guess that's one of the reasons why there seems to be a small cap excess return in the longer run.
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Old 09-22-2014, 08:56 AM   #22
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Originally Posted by clifp View Post
BTW, how did you arrive at the decision to sell them after 1 year?
That wasn't my decision, it's what Greenblatt first backtested (in 2004 or whenever the first version of the book came out). Since then, and when the updated book came out (2010), that's the prescription: sell after one year. It does seem arbitrary except for it's designed for after-tax accounts where you can sell losers a few days before the one year mark and sell winners a few days after the one year mark.
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Old 09-22-2014, 09:33 AM   #23
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Sengsational, It would be interesting to see how it works out for you. I wasn't prepared to buy 30 stocks with all the investable cash but can try with a starter amount and see how it works. The key point he makes is to follow the system for 3+ years.
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Old 03-10-2016, 07:06 AM   #24
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Posted this before: I bought shares of 10 small "magic formula" companies in february. So far the mix is about break-even so actually lagging the market.

Not worrying though, I'll keep running the experiment for a while.
Is this still going? I still haven't done a thing with it...I've had enough other financial things to tinker with. But those are running out lately.
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Old 03-10-2016, 12:37 PM   #25
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Thanks for the reminder. I'm posting an update in The Magic Formula Experiment

Long story short: bad results in the 2nd year after a neutral first year.
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Old 03-17-2016, 08:49 AM   #26
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That was a good post. Thanks.
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