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 four 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 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.
Randolph McDuff: (Track Record) Randolph McDuff has one of the longest track records at Marketocracy. For over 7 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.
Chris Rees: (Track Record) Chris Rees has made money on 86% of the stocks he has put into his Marketocracy model portfolio over the last 6-1/2 years. He clearly puts a lot of thought into his decisions before he makes an investment. His average gain to average loss ratio of 1.93 says that when he has a winner, he made nearly twice as much money on average as he lost when he made a mistake.
Adam Thompson: (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: (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: (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: (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: (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.
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.