I know the title is a little bit provocative, but stay with me here.
I found the fantastic Instructable on "Magnetic Sillty Putty" And just had to give it a try, It took me a bit of work to find the right mix, due to the dollar store sized lumps of "color putty " being different sized. but eventually i was able to make a product just like the other Instructable noted. and it was fantastic.
Although it was a bit stiff/slow. I kept wondering if it was possible to thin the putty down somehow.
Indeed you can, and this Instructable will say how, and show a little bit of how it differs.
Skip to step3 if you already have magnetic silly putty, or already have seen the fine Instructible listed above!