Note to readers: In this series, we suggest worthwhile reading material on a variety of topics, not all of which are directly related to investing. Some of the articles are behind pay walls. However, it is often possible to read
Manual of Ideas Offers Insights into ‘Magic Formula’ Approach
One of the most compelling investing systems developed in recent years is Joel Greenblatt’s ‘Magic Formula’ approach which is documented on the magicformulainvesting.com website as well as Mr. Greenblatt’s The Little Book That Beats the Market. The formula ranks stocks based on two very simple and easily calculated figures: earnings yield and return on capital. Read this article to learn more about how The Manual of Ideas adds qualitative insight into magic formula stocks.
Joel Greenblatt Applies Magic Formula to Global Investing
Joel Greenblatt outlined his “magic formula” for stock market investing in The Little Book That Beats the Market. Mr. Greenblatt’s formula ranks stocks based on two simple and easily calculated figures: earnings yield and return on capital. Rather than merely looking for the cheapest companies, the goal is to also find good businesses that achieve high returns on capital. In the interview shown below, Mr. Greenblatt discusses a new fund that he is introducing which will apply the magic formula to global markets. Read this article for more details and to view the video.
Joel Greenblatt Interview on CNBC
Joel Greenblatt, founder of Gotham Capital, shared his thoughts on a number of investing topics in a rare interview on CNBC this morning. The focus of much of the discussion was related to Mr. Greenblatt’s “magic formula” strategy that he outlined in The Little Book That Beats the Market. Read this article for more information and to view the video.
Greenblatt’s Advice on Special Situations
While reading Joel Greenblatt’s book, You Can Be a Stock Market Genius, it occurred to me that I exhibited the exact behavior that he predicted when I almost immediately sold the shares in Hospira that I received from Abbott Laboratories’ spin off of the subsidiary in 2004. Since I had purchased shares of Abbott based on the overall characteristics of the parent company rather than the attributes of any one unit, I viewed the relatively small position I received inHospira as a distraction that was not worth the time required to own (in terms of keeping up with corporate developments, reading reports, etc). Read this article for the full story …