Post of the Day
December 7, 1999

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Foolish Workshop

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Subject:  2 Years of MI - Lessons Learned
Author:  krulak

It's my rebalance time, and here are a few random lessons learned about the Workshop and Mechanical Investing.

1. Take your time. I first started reading the Workshop and its message boards in December of 1997. Yes, that is around MI message # 1200. I remember reading rayvt before he was deemed a curmudgeon, sparfarkle when his "this beats UG" screen was being attacked from all sides, elann before his elevation to TMF status, and Moe as he brought forth the PEG. Yet from December of 97 to December of 98, I did nothing but read. I didn't leap into the latest and greatest datamine, but worked to understand the underlying principles behind the screens and the stats that make them valid. I don't recommend a year wait for everyone (or anyone), but be sure that you know what you are doing and why you are investing in a particular screen. Chasing return without knowledge is a dangerous proposition.

2. Have a goal. In the past year my portfolio returned 91.2% using a blend of Spark annual, Keystone annual and Peg semi-annual screens. This beats the S&P's 24.4% over the same time frame, as well as beating the Dow, NASDAQ, and all the portfolios that TMF follows outside of the Workshop. But, does any of that matter to me -- NO. Because my goal was to beat the perennially under performing mutual fund that my former investment advisor had me in. Of course this year that fund chose to outperform the S&P, returning 41.9%. However, my portfolio still crushed the fund, and I have the satisfaction of meeting my goal.

" goal was to beat the perennially under performing mutual fund that my former investment advisor had me in."

3. Be your own person. Next to the folks doing the monthly strategies, or the options traders, my returns pale in comparison. Again, does that bother me in the least -- NO. I wish the very best of success to all those out there getting those spectacular gains, but that isn't the path for me. I love the beauty of buying stocks only twice a year and having the luxury to ignore my portfolio for six months at a pop. It fits my life, it fits my job, and it fits my personality. But it certainly isn't the way for everyone (or anyone) else. So do things your way, you'll be happier.

4. Follow the screen. I throw this one in there just for completeness sake (what would a lessons learned column be without the MI mantra). Although I am far to lazy to ever put in the effort to try and second guess the screen, my limited data shows it would have been a bad idea. My top performing PEG stock dropped like a rock during the month I bought it only to rebound and soar to great heights. If ups and downs bug you, maybe MI isn't for you. It certainly isn't the only way to invest, and if you don't whatever perverse character trait that is needed to stick to a screen during good times and bad, find an investment platform that will fit who you are.

Anyhow, the past two years have been quite educational for me, and I wish all of you the best of luck as you go down the MI path.


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