mFOLIOs
mFOLIOs are professionally managed portfolios that give you access to the best at Marketocracy through a managed account at FOLIOfn. As the manager of the mFOLIOs, it is my job to select the mFOLIO Masters, oversee their decisions, and to manage them as a team.
We've put eleven outstanding Marketocracy members under contract to be mFOLIO Masters so we can use their model portfolios to create mFOLIOs. In addition, the "Best Ideas" model portfolio that I have been managing for Marketscope subscribers and writing about on MSN's Strategy Lab is also available as an mFOLIO.
The mFOLIO Masters
To select the first group of mFOLIO Masters, I started with Morningstar's list of the 10 best performing mutual funds over the past 5 years and added the top Marketocracy model portfolios with 5 year track records. When I sorted by 5 year average annual return, there were 21 Marketocracy model portfolios that performed better than the 10th best performing mutual fund.
Most of the 21 Marketocracy model portfolios, and ALL of the mutual funds on Morningstar's list focused on either global resources or real estate. Since these two sectors have had such an amazing run over the past 5 years, I don't think the prospects for either sector is as attractive as it was 5 years ago. However, among the Marketocracy model portfolios, I found seven that delivered comparably impressive returns, but with diversified portfolios. The people who managed these model portfolios are our mFOLIO Masters.
I consider each of these mFOLIO Masters to be a generalist -- meaning each has made a lot of money in more than one sector. I think the good judgement they've exhibited on when to get in and when to get out of different sectors is very rare. In today's market where one month's best stocks are next month's dogs, it is a particularly valuable skill to have on the team. I don't think anyone has a team as impressive as this one. Let me tell you what I found most attractive about each of them.
John Navin: (jnavin:JMF Track Record) John Navin navigated through much of the crisis in 2008 starting in April '08 by buying inverse ETFs, moving into Cash, and finding stocks that would fare better in a bear market. Navin is a technical analyst using complex Fibonacci mathematics and other methods to start with a top-down view of the market and this was the strongest bear signal he has seen this decade. He is also trained in Benjamin Graham style fundamental value analysis and this gets combined with the technical analysis as he drills deeper into industries and individual stocks. When the market is responding less to fundamental company economics and more to the fears and greed of the market - particularly in a bear market - Navin's technical analysis may prove to be more effective.
Randolph McDuff: (rmcduff:RMG1 Track Record) and (rmcduff:RMG2 Value Catalyst Track Record) Randolph McDuff has one of the longest track records at Marketocracy. For almost 8 years he has navigated his model portfolio using a value approach to go into and out of various sectors and stocks to find pockets of opportunity to beat the market. We consider him a "multi-zone" investor as he is not confined to a single sector of the market. RMG2 VC is a small cap (often micro-cap) oriented portfolio, looking for a specific catalyst to drive performance. RMG1 tends to be larger cap oriented (often foreign companies) where Wall St. analyst coverage is weak and inefficient.
Chris Rees: (crees:10STX Track Record) Chris Rees has made money on 87% of the stocks he has put into his Marketocracy model portfolio over the last 7-1/2 years. He clearly puts a lot of thought into his decisions before he makes an investment. 10STX or Ten Stocks is the name of his model portfolio and he generally tries to maintain a portfolio of ten positions - each carefully selected as an individual investment but also for their role in the overall portfolio. Surprisingly very diversified for such a small number of positions, Crees also uses cash very effectively. Averaging over 22% in cash but going fully in when the time is right.
Adam Thompson: (athompson:TPSNX Track Record) Adam made money on 79% of the stocks in his Marketocracy model portfolio indicating that he also does a great job of stock selection. But the most impressive aspect of Adam's track record is that when he picks a winner, he has made 3.82 times as much money on average as he lost when he made a mistake.
Ian St. Martin: (ist.martin:ORR Track Record) Ian has made money on only 51% of the stocks he has selected over the past 5 years. However, his astute trading enabled him to make more than twice as much on his winners as he lost on the losers.
Crossy: (crossy:CIAF Track Record) Crossy is an IT consultant living in Austria. He leverages his firsthand industry experience and contacts to research companies. He has made money on slightly less than 50% of his stocks, but on the profitable ones he made on average 3 times more money than he lost on the mistakes.
Jack Weyland: (jackweyland:VALUE Track Record) Jack combines bottoms-up fundamental research with quantitative analysis that helps him time his trading. During 2007's volatility he has astutely traded the ProShares Trust UltraShort Russell 2000 Index ETF (TWM) which double shorts the Russell 2000 to hedge his portfolio during the downdrafts and made TWM one of his biggest gainers. Jack's trading of Elan Corp. (ELN) brought it onto my radar screen and eventually onto my Best Ideas Portfolio.
Tim Eriksen: (teriksen:ESVF Track Record) Tim has made most of his money in Energy, Financials, and Consumer Discretionary through a very diversified portfolio. He has shifted towards asset management companies at a good time and has started to get into some banks that have been hit because of their subprime exposure. His 75% winning ratio of making money on 132 out of 174 different companies he has traded over six years is very impressive.
Here are a few more mFOLIOs that we've just added to our lineup:
Eugene Groysman: (eugeneg:EMF Track Record)
Thomas Krouse: (advisorCFA:AGBF Track Record)
Timothy Siegel: (timbo56:SSOF1 Track Record)
Vadzim Yazvinski: (dishwasher:VMSF Track Record)
I do not expect anyone, not even an mFOLIO Master, will deliver the same returns going forward as they've averaged over the the last 5 years because the stocks that did so well for them have appreciated so much that they are no longer as attractive as they were 5 years ago. No one knows what the future holds, but whatever opportunities the future presents, I expect these mFOLIO Masters will use the same good judgement (both stock selection and trading) they've displayed in the past to help us take advantage of them.