Time for a MHP (Magic Hat Portfolio) update. British American Tobacco (LON:BATS) gets kick out of the portfolio by rotation, and Euromoney Institutional Investor (LON:ERM) enters.

BATS has been a disaster for the portfolio, falling 40% in a year. I hold it personally, and IIRC at least one of the regular contributors to this site does, too. I am going to stick to the rules of the MHP, which is to buy stocks on the Greenblatt Screen with a StockRank of at least 90. It is a system that works well, and has beaten the FTSE350 over an extended period.

That's why BATS leaves, and ERM enters.

I see that the FTSE350 is up a mere 2.6% in 5 years. Hardly racy. The FTSE100 is below the peak it achieved in 1999. The 250 is almost higher. Valuations for the 100 and 250 are about the same. So, elephants don't gallop. As I have said on many occasions before, unless there are gross valuation distortions between the 100 and 250, investors are likely to do better by buying companies in the latter index.

Valuations look below historical averages, and we had a down year for the markets last year. So I continue to hold the view that we a more likely to have an up year than down year.

Stay safe out there.

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