Magic Formula Conclusion Februari

Originaly posted 21 february 2007

Again the results are amazing.

The magic Formula stocks have a return year to date from 7,93%. In less then 2 months!

My own stock picks again performed better than the market, but again worse than the magic formula stocks returning 6,62%

The benchmarks performed with an average of 3,98% and the highest within them 5,91% so in every way the magic formula stocks have beaten them.

The Dogs of Euronext didn't do as well as the magic formula stocks. In just over a full month they did worse than the market. Dogs of Euronext returned 3,24% while the market returned 3,79% over the same period.

Underneath is a summary of my portfolio.

Name	Date bought	Number	Price payed	Price 18/01/2007	Difference
Hci capital	18/10/2006	363	13,87 €	18,80 €	35,54%
salzgitter	18/10/2006	63	79,89 €	102,91 €	28,81%
Belgacom	17/11/2006	108	27,90 €	34,01 €	21,90%
Mittal	17/11/2006	100	29,36 €	38,23 €	30,21%
Brederode	17/11/2006	105	29,00 €	30,31 €	4,52%
fornix bioscience	17/11/2006	140	22,34 €	22,00 €	-1,52%
Unibail	14/12/2006	17	180,70 €	235,80 €	30,49%
Innoconcepts	14/12/2006	255	11,75 €	13,38 €	13,87%
Tomtom	18/01/2007	91	33,13 €	33,14 €	0,03%
GL Trade	18/01/2007	73	41,45 €	40,90 €	-1,33%
Rio Tinto	16/02/2007	70	42,97 €	43,21 €
Total Portfolio			62.256,80 €
Stocks			43.437,37 €
Cash			18.819,43 €
Increase since 01/01/2007			6,62%
58.390,45 €
Increase since start
57.335,76 €			8,58%

Still 30% of the portfolio is in cash. Meaning in an upward market as we are experiencing today the more we invest the better our results. So actually 6,62 isn't bad at all.

However I am wondering if I'm doing the right thing by selecting stocks inside the magic formula results on such simple rules. I think by screening on those simple rules I select stocks with less risk, but it seems by doing that I also leave the high runners out. And wasn't that one of the strong parts of the Magic Formula? High gains through diversification?