A little German saying ...

There is a German saying "Kleinvieh macht auch Mist" -- the direct translation would be that "small animals also create dung". The more proper English saying would be that "Many pennies make a dollar" .

The "dung" in my MFI portfolio has been dividend payments. I just have not paid that much attention to it. But sure enough, after about 6 month of owning a number of stocks it has added up to "make a dollar" -- actually over $600.

Now this creates several problems for me:

- now I have to add these dividend payments into my returns for the MFI portfolio, which sounds easier said than done, because most portfolio trackers (I use Yahoo and Morningstar) are not exactly set up for this

- the next problem is what to do with the money (true - this is always a good problem to have) - but you can not really invest $28.75 at a time >> I will probably have to always wait until the next quarterly purchases and reinvest the money then.

- I don't know about other people, but why is it that I have paid quite a bit of attention and worry to the transaction cost of managing the MFI portfolio, but it takes me 6 month to start thinking about the dividends ??

Why did it have to be HR Block ?

In my last round of buys, I picked up HRB -- HR Block . They have been on the MFI lists ever since I started this whole thing in the beginning of the year. I almost bought shares in Feb, but then 30 seconds of TV changed all of this.

It was before tax time and I saw an HR Block commercial --- they offered a scratchers game (same as you play in your local liquor store) for people that had them do their taxes.

That was a HUGE turnoff for me -- why ???

I view "Doing taxes" as a rather important financial transaction -- probably right up there with a quarterly review of your investments, maybe even more important than that. Why on earth would I want to go to a place that offered me a scratchers game to do my taxes ?? What's next -- go to a BINGO HALL and have your taxes done while playing Bingo ??

or

The new tax season is here -- go to Las Vegas and have the casino do your taxes.

It just does not make ANY sense to advertise like that so I was never going to buy HRB -- until my random August buys came up with HRB in the selection process and now I am stuck with them -- but I swear, if I see another commercial like this during tax season, I am dumping the shares no matter what...

AUGUST BUYS -- completing my $$ investment in MFI

August represented my last round of investing part of my savings in MFI stocks. I may have to sell some of my February buys in November, because I would like to get towards a regular quarterly buying.

Again -- I used a different approach to buying / picking the stocks this time around. I was getting a little worried about having so many stocks in the portfolio that showed recent disasters -- meaning BIG one-time drops or 3 month downward trends dropping 30-50% in value.

So again, I waited until about 2/3 of the MFI top 50 list (100 mill cap) was updated for earnings and i kicked out stocks I already owned. That gave me 30-32 stocks. Now I went and checked their current price against the 50 day and 200 day moving average and I kicked out all the "disaster" stories (many were 30-50% off the averages). Of the remaining 15 bought 7 stocks at random.

ASPV
CRYP
IVAC
HRB
THO
GIB
VTRU

Not very happy about the VTRU and HRB being in the group. They have been lingering in the MFI listings for a long time now - and VTRU has at least done a little something, but I really have very little faith in HRB. (See my post about HR Block for more...)

Funny coincident about GIB -- I did not realize right away that this was CGI -- a tech consulting company out of Canada. My brotyher just got a job there in Germany -- now this is a REALLY big deal since people in Germany DO NOT switch jobs very often (I think this is the 2 company he has worked for in the last 15 years..). So, now I have somebody to blame if this stocks goes downhill...

MAY purchases for Magic Formula Investing -- random picks

My May purchases are really different from the original puchases -- so I keeping them seperate for now, but I will combine them eventually.

This time around I wanted to go completly random using the MFI stocks. I wanted to get updated quarterly numbers so was waiting for the MFI list to show all the 3/30 quarterly upates. That actually takes quite a while, usually until about May 20 or later. Of course I was getting a little anxious, so I bought on May 17 --- It was a downday for the markets, so I thought the timing was good (it was followed by 2 or 3 more downdays, which would have saved me quite a bit of money -- but you never know this stuff).

This time around I wanted to pick at random -- which is easier said than done. I used 100 mill market cap and 50 stocks from the MFi website. I kicked out the one's that I had already bought and the one's that had not posted earnings (there was one stock on there with Sept. as the last earnings date).

- That gave me a 41 stocks
- I plugged them into Yahoo finance which now updates realtime
- At a random time I copied all the current stock prices into an excel sheet and then I bought the shares where the first digit after the comma was a 2 or a 4. So if the price was 12.86, I did not buy -- if the price was 44.28, I bought.
- Why use such a strange stock picker -- I really wanted to avoid cherry picking this time around. And even looking at the names of many of these stocks, I would always be influenced (also because I have been reading and watching a lot of MFI blogs / message boards and many of the same stocks are being talked about)
- The other advantage was that it provided a random number on how many stocks to purchase - in this case it as the following 9 stocks:

CALL
DEBS
GMR
GSTL
INTX
NADX
PTEN
TOPT
TGIS

I just went and bought an equal $ amount of each -- never even checking anything about these companies. That takes A LOT OF FAITH !!!!!!!!!!!!!!!!

How is this May portfolio doing so far --( benchmarks are measured from May 17) ???
May MFI: -4.25 %
SP500: +2.1 %
Russ2000: -2.75%

So this one is a little behind the Russel and quite a bit behind the SP500. I had 2 stocks that just dropped 20-25% within the first 10 days of purchase and i have been behind ever since.

TGIS is such a tease of a stock -- I bought it at 11.42 -- it has been as low as 9 and as high as 16 in the last 2 month alone -- right now it's at 10 or so.

I got 3 shipping stocks -- 2 of which are paying a VERY high divident yield. That will be difficult to track in terms of portfolio return -- their yield is over 10%.

BACK IN BUSINESS -- an UPDATE on FEB 06 buys

Wow - I am not sure why I have not been updating my blog here. I think I was getting a little carried away with checking my portfolio (too often - see human nature post). So I wanted to get away from it all.

Here is a Numbers update --- because money talks ...:

I had bought 20 stocks in February -- and I still have 17 of them. I switched out a few for various reasons. I am hoping to be able to purchase 7-8 stocks every quarter, so I sold a few that I did not have much faith in -- I had one that was bought out for cash -- and I sold one (Portalplayer -- I will post another update just for that one). The net effect of the "non-standard" transactions (I call them non-standard because you are supposed to hold the stocks for one year) -- the effect was +- 0 -- so I am still able to track the original portfolio's return.

TODAY my February MFI is up 7% -- benchmarks >> SP500 is even and Russell 2000 is down 2% over the same time period. So overall VERY ENCOURAGING and I am very happy with the progress.