In January 2015, I published an article titled The Best Shares in Singapore’s Stock Market that marked the start of a real-time experiment I’m conducting on Singapore’s stock market to find out if the Magic Formula investing strategy works.
The strategy was developed by investor Joel Greenblatt, who generated an astounding annual return of 50% from 1985 to 1994 according to The New York Times. In his 2005 book The Little Book That Beats The Market, Greenblatt shared the Magic Formula and his studies on it. You can find a detailed description of the investing strategy in The Best Shares in Singapore’s Stock Market, so I won’t repeat myself here. But one thing worth noting is that Greenblatt’s investing method requires a yearly refresh to find a new list of shares to build a portfolio.
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So, I’ve written a series of articles in the Januaries of 2015, 2016, 2017 and 2018 touching on each year’s new list of shares, as well as the lessons I’ve learnt from each run of the real-time Magic Formula experiment. Here are the articles:
1. On the returns and lessons from the 2015 Magic Formula portfolio
2. On the Magic Formula portfolio for 2016
3. On the returns and lessons from the 2016 Magic Formula portfolio
4. On the Magic Formula portfolio for 2017
5. On the returns and lessons from the 2017 Magic Formula portfolio
6. On the Magic Formula portfolio for 2018
7. On the returns and lessons from the 2018 Magic Formula portfolio
Below you’ll find the five best shares – in descending order – within my list of 30 shares for the 2019 Magic Formula portfolio (in the same manner that I’ve been running this real-time experiment, I had excluded all financial and utility stocks, as well as those with a market capitalisation of less than S$100 million):
In the following table, you can see all the 30 shares:
Source: S&P Global Market Intelligence
According to Greenblatt’s Magic Formula, the shares above are the best in Singapore’s stock market for 2019. Which are the duds and which are the winners? Only time will tell, so let’s check back again in January 2020! Over the next few days, I’ll be sharing the valuation and financial data of the 30 shares in my 2019 Magic Formula portfolio, so do keep a lookout! [Editor’s note: An article sharing the valuation and financial data of the 30 shares has been published. It can be found here.]
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Chong Ser Jing owns shares in Noble Group, Valuetronics, Yangzijiang Shipbuilding Holdings, Hi-P International, Straco Corporation, AusGroup, Boustead Singapore, and Venture Corporation. The Motley Fool Singapore has a recommendation on AEM Holdings, Straco Corporation, and Boustead Singapore.