Ok with that said about the project:
- Every month I will post a list of the top 30 stocks I found after screening the stocks from Euronext Brussels, Amsterdam and Paris; Deutsche Börse and London Stock Exchange (LSE) with the Magic Formula adapted to the information available to me. Lists will be made between the 15th and 20th each month.
- From this list I will pick stock(s) I buy with real money following a set of rules
- A virtual portfolio will be held from the stocks ranking at the top, to compare the results with my handpicked stocks
- Both will be put against 4 benchmarks (Euronext 100, Dax , FTSE and MSCI Barra’s Europe) for comparison
Rules
- Compare the company to other companies in the same industry, preferably direct rivals. Points I compare are P/E, Price to book value , Debt to Equity and Return to Equity.
- I look at the trend over the last years, meaning turnover and profit growth or decline and at what rate.
- I will hold the stock for 1 year with 2 exceptions. It drops off the entire list ( not the one found here but the list with all stocks, meaning some of the base values screened on, are changed for the worse) then I will sell before the year has passed. Second exception, if the stock is still within the first 30 I will hold it for yet another year.
For the people who don’t know what this Magic Formula is, please read my posts about Joel Greenblatt, The Magic Formula and The Little Book That Beats The Market
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