MTH Reddit Mentions | ChartExchange

Back in October, I decided to test Magic Formula investing with paper trading.
Just picked the strategy that looked the most promising and tried to do my own kind of backtest to see if backtesting tools are actually correct.
To generate a picklist of the Magic Formula stocks, I used [OutperformMarket.com](http://outperformmarket.com/) to screen and export the top Magic Formula recommended 30 stocks basket at the time. No manual cherry-picking, just the raw ranking output.
Doing so was supposed to give me honest returns, excluding backtesting tools major problems like survivorship bias.
So instead of trusting a potentially biased simulation, I decided to test it forward — starting from a clean snapshot in October and letting the market do whatever it wants.
I’ve been running this as paper trading for now - real prices, real timing, no retroactive changes, and no rebalance yet.

Here’s the full list of mentioned portfolio including price during pick (October 2^(nd)), price today, and return:
|**#**|**Symbol**|**Name**|**Pick date $**|**Current $**|**Price return**|
|:-|:-|:-|:-|:-|:-|
||
|1|LUXE|LuxExperience B.V.|$7.88|$9.67|\+22.7%|
|2|RIGL|Rigel Pharmaceuticals, Inc.|$28.12|$34.74|\+23.5%|
|3|RYN|Rayonier Inc.|$26.90|$21.49|\-13.9%|
|4|NVAX|Novavax, Inc.|$9.55|$10.14|\+6.2%|
|5|HOV|Hovnanian Enterprises, Inc.|$128.51|$125.62|\-2.2%|
|6|PBYI|Puma Biotechnology, Inc.|$5.22|$5.70|\+9.2%|
|7|TTI|TETRA Technologies, Inc.|$5.56|$8.66|\+55.8%|
|8|CVAC|CureVac N.V.|$5.39|$4.66|\-13.5%|
|9|WLKP|Westlake Chemical Partners LP|$21.20|$22.02|\+8.3%|
|10|ZIM|ZIM Integrated Shipping Services Ltd.|$13.79|$28.83|\+111.3%|
|11|FOR|Forestar Group Inc.|$26.84|$28.72|\+7.0%|
|12|CINT|CI&T Inc|$4.89|$4.96|\+1.4%|
|13|MTH|Meritage Homes Corporation|$73.71|$75.42|\+2.9%|
|14|SIGA|SIGA Technologies, Inc.|$8.95|$6.47|\-27.7%|
|15|EGAN|eGain Corporation|$9.06|$9.34|\+3.1%|
|16|INMD|InMode Ltd.|$15.46|$13.75|\-11.1%|
|17|ESEA|Euroseas Ltd.|$58.28|$68.74|\+19.1%|
|18|WFRD|Weatherford International plc|$66.29|$105.46|\+59.9%|
|19|CTMX|CytomX Therapeutics, Inc.|$3.28|$5.37|\+63.7%|
|20|SNCY|Sun Country Airlines Holdings, Inc.|$11.84|$19.68|\+66.2%|
|21|NUTX|Nutex Health, Inc.|$107.19|$110.46|\+3.1%|
|22|FSTR|L.B. Foster Company|$26.36|$30.73|\+16.6%|
|23|ABR|Arbor Realty Trust, Inc.|$12.43|$7.93|\-33.8%|
|24|GIII|G-III Apparel Group, Ltd.|$26.92|$30.59|\+14.0%|
|25|PVH|PVH Corp.|$82.68|$68.60|\-17.0%|
|26|PRG|PROG Holdings, Inc.|$31.57|$35.21|\+11.9%|
|27|GSL|Global Ship Lease, Inc.|$30.56|$41.08|\+38.5%|
|28|FBRT|Franklin BSP Realty Trust, Inc.|$10.97|$9.13|\-13.5%|
|29|ANF|Abercrombie & Fitch Co.|$85.67|$97.80|\+14.2%|
|30|GFR|Greenfire Resources Ltd.|$4.57|$5.94|\+30.0%|

Total return: \~15.2% (including dividends paid during the test).

**Is +15% Sustainable?**
Short answer: Sometimes it happens, sometimes not at all.
Long answer:
15% in 5 months means 36% annually if kept at the same pace, which is still far below the greatest years of Magic Formula historically, if we should believe backtests.
Magic Formula historically:
* Outperforms over long periods
* Underperforms in certain cycles
* Looks broken at times
A few months of outperformance means almost nothing statistically, but still hardly above expectations for a dead strategy, which I could read about several times in this sub.

Why Paper Trading?
Because I wanted to test the strategy without any bias that comes with backtests, like survivorship bias, and not do it with my own capital. I just wanted to plant the seeds and see what happens. If you are interested in what will happen with that portfolio over time, write a comment or DM me. I have a couple more paper trades around strategies planted.

Question for the sub:
In my opinion, only beating the S&P 500 makes sense to do anything other than picking SPY ETF. Did you try any strategy by yourself and have experience comparing it with the S&P 500? Do you know any other strategies you would recommend me to test in a similar way, or have your own results to share (only real results from portfolio interests me)?