The Naked Portfolio is down about 0.50% compared to the previous month:

The S & P 500 edged closer to the Naked Portfolio return. Hmm... Perhaps this is due to the legendary January effect. Doesn't matter. I'm excited that White Mountains (NYSE: WTM) has recently traded below my previous buy price at $566/share. I jumped at the opportunity and bought myself a position in White Mountains.

To date, the Naked Portfolio has $1671.29 make-believe cash on hand. I'm still deciding between adding more shares of White Mountains to the Portfolio and buying shares of a company I'm currently researching. I shall share the result of my research once I'm done.

I don't have much to say about the current holdings in the Naked Portfolio other than they are still great and I truly believe they will outperform the market by end of this year. The insurance companies are already charging a higher premium for new policies. This will be reflected in the upcoming quarterly earnings report.

Since I don't have much to say, I thought I'd offer up a couple of book recommendations to everyone:

1) You Can Be A Stock Market Genius by Joel Greenblatt of Gotham Capital
This book focuses on special-situation investing (i.e. spinoffs, merger arbitrages, brankruptcies, LEAPS and options, etc.). I have always thought special-situation investing as risky and too difficult for lousy investors like myself. But the book provides plenty of case studies and take you through the process of placing a value on companies involved in the aforementioned situations.

For those who don't already know, Joel Greenblatt is one of the managing partners of the hedge fund Gotham Capital that has returned on average 40% annuallized over 20 years. In other words, the guy's an investing genius. Even so, he admits to his mistakes in the book and how he learned from them. I think the book is great for those of us who are brave. The theory is if you could allocate say 25% of your portfolio to one of these special-situation investing, you could be doing a lot better than a market-beating return. Of all the special situations he discussed in the book, I find spinoffs easiest to understand and the least risky.

2) The Little Book That Beat The Market by Joel Greenblatt of Gotham Capital
This is the book that promises a magic formula for investing that has proven to return market-beating results over a period of 17 years. The book starts off explaining the very basics of the stock market. Joel does it so well that even a teenager can understand. Once you have grasped the idea behind the stock market, you can quickly begin to understand why the magic formula works. He goes on to prove how it worked and how it will continue to work. And finally, he lays out a step-by-step process for you to emulate the magic formula portfolio. What's the catch? You have to believe that it will work. Well, that and I'd add you need to have patience, lots of them.

So, there. Instead of getting lousy advice from me, you can go read the two books by Joel, a proven investing genius. If you do make a ton of money using the magic formula and for some reason you would like to thank me, just send me a copy of the most expensive out-of-print book (last I checked, it's going for $1900) I've ever come across - Margin of Safety by Seth Klarman. Supposedly it's one of the best investing books out there.

mortgage calculator