Magic Formula Investing

Using the Magic Formula for investing; based on "The Little Book that Beats the Market" I started a real life test with $50,000 of my own money. The blog described the process, thoughts, pain and ongoing updates on this adventure.

Thursday, February 15, 2007

I hate trying to time the market !!!

One of the main reasons I was initially attracted to the MFI formula was the simplicity of it. I am not pretending to be an expert stock picker, but I do have a good understanding of the financial markets, reading accounting statements and all that good info out there.
The MFI formula seems to be a great way to pick a diverse group of stocks that provide the opportunity to make above market returns.
But even once you have picked the stocks - most experts will tell you that you can probably buy the chosen stock cheaper by just waiting it out for a few weeks and not buy while the stock has been gaining for 3 straight days and not sell while the stock is under a 2 day downturn.

So - I wanted to sell Grubb Ellis - GBE after it had given me a -4% return over the past year. I bought it at 11.3 and it went as high as 14 and as low as 8 but it seemed like a good time to sell. Earnings were released a week before (mixed) and the stock was on a little bit of an upturn - gaining from 10.40 to about 10.90 over a week's time. I sold and the rally just got a little steam today with a 5% gain (for absolutely no good reason what so ever ) and 4x average volume.

So much for trying to find a good time to sell or buy .....

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