Proforma: The MHP (Magic Hat Portfolio) on Stockopedia (http://www.stockopedia.com/fantasy-funds/magic-hat-463/) is an experiment by me to see if a human can improve on a mechanical Greeblatt Magic Formula screen. I am trying to weed out "mistakes" that I feel the screening commits: unseasoned companies, scams, foreign companies (particularly Chinese), fishy accounting, and statistical quirks. Apart from that, I am agnostic as to the sector the company operates in, although I will try to avoid heavy concentration in any one sector. I will mostly apply "Strategic Ignorance", by which I mean that I wont try to be clever in my stockpicking. My picking will be mostly mechanical. A summary of transactions can be found at https://blippy.github.io/money... As of January 2020, I have adjusted my strategy a little. Instead of selecting stocks from the Greenblatt Screen, I will select them from Stockopedia's Screen Of Screens, and look for a StockRank (TM) in the 90's. I won't rule out selecting something from the Greenblatt Screen, though. With the boilerplate now out the way, let's move on to the actual content ...
Somero Enterprises Inc (LON:SOM) was due to be booted from the portfolio by rotation today. However it has a StockRank of 98 and passes the Greenblatt Screen. It also seems to be highly favoured by Paul Scott. So there's no need for me to trade this share just for the sake of it.
Looking at the performance of the portfolio overall, I see it has returned 5.1% annually, excluding dividends. Hardly a stellar performance, but probably beating the majority of fund managers. The index has effectively gone nowhere over the last decade.
I took a quick look at Paul's post today: He writes:
I don't think QE will ever be unwound.
Oh boy, he got that right. It seems that a banker's solution to every problem is to pump more money into the system. Where this all ends nobody knows. Badly - very badly - is my suspicion.
Meanwhile permanently low interest rates (which might even turn negative maybe at some stage?) is good news for equities.
Hmm, I'm going to declare my cup to be half empty rather than half full on that one. If interest rates turn negative, I'll take that as conclusive proof (as if any were needed) that nobody knows what they're doing, and never did.
Do you not know, my son,…
