Stock Name
|
Last Price
|
Change
|
Shares
|
Market Value
|
%
|
Average Cost
|
Per Share
|
Unrealized Gain
|
%
|
Day Gain
|
%
| |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
BJCORP  | MYR | 0.38 | 0.00 | 15,000 | 5,700.00 | 3.65% | 6,241.87 | 0.416 | -541.87 | -8.68% | 0.00 | 0.00% |
| BJCORP-WB | MYR | 0.135 | +0.005 | 10,000 | 1,350.00 | 0.87% | 1,660.50 | 0.166 | -310.50 | -18.70% | +50.00 | 3.85% |
| EDGENTA | MYR | 3.33 | +0.09 | 2,000 | 6,660.00 | 4.27% | 5,455.64 | 2.727 | +1,204.36 | 22.08% | +180.00 | 2.78% |
| GSB | MYR | 0.13 | +0.015 | 150,000 | 19,500.00 | 12.50% | 14,283.53 | 0.095 | +5,216.47 | 36.52% | +2,250.00 | 13.04% |
| JCY | MYR | 0.875 | +0.02 | 20,000 | 17,500.00 | 11.22% | 11,025.30 | 0.551 | +6,474.70 | 58.73% | +400.00 | 2.34% |
| MINTYE | MYR | 1.25 | +0.03 | 10,000 | 12,500.00 | 8.01% | 11,526.95 | 1.152 | +973.05 | 8.44% | +300.00 | 2.46% |
| MSC | MYR | 2.45 | -0.05 | 5,000 | 12,250.00 | 7.85% | 12,929.77 | 2.585 | -679.77 | -5.26% | -250.00 | -2.00% |
| NYLEX | MYR | 0.57 | -0.01 | 5,000 | 2,850.00 | 1.83% | 2,761.83 | 0.552 | +88.17 | 3.19% | -50.00 | -1.72% |
| PJDEV-WC | MYR | 0.465 | +0.005 | 5,000 | 2,325.00 | 1.49% | 2,686.81 | 0.537 | -361.81 | -13.47% | +25.00 | 1.09% |
| POHUAT | MYR | 2.05 | -0.02 | 20,000 | 41,000.00 | 26.29% | 14,633.98 | 0.731 | +26,366.02 | 180.17% | -400.00 | -0.97% |
| POHUAT-WB | MYR | 1.06 | -0.01 | 5,000 | 5,300.00 | 3.40% | 0.00 | 0.00 | +5,300.00 | 0.00% | -50.00 | -0.93% |
| SUPERMX | MYR | 3.42 | +0.01 | 5,000 | 17,100.00 | 10.96% | 8,570.12 | 1.714 | +8,529.88 | 99.53% | +50.00 | 0.29% |
| TEOSENG | MYR | 1.52 | -0.01 | 4,500 | 6,840.00 | 4.39% | 5,505.65 | 1.223 | +1,334.35 | 24.24% | -45.00 | -0.65% |
| TEOSENG-WA | MYR | 0.55 | -0.01 | 750 | 412.50 | 0.26% | 0.00 | 0.00 | +412.50 | 0.00% | -7.50 | -1.79% |
| $CASH | 4,678.05 | 3.00% | ||||||||||
| Total | 155,965.55 | 100.00% | +2,452.50 | 2.41% | ||||||||
Saturday, December 26, 2015
2015 Dec YTD result.
http://klse.i3investor.com/servlets/pfs/41621.jsp#tabs_group2 55% YTD.
Friday, December 25, 2015
巴菲特这一年：伯克希尔或创下7年来最遭表现
今年对大多数投资者而言绝非平坦之年，连最具传奇色彩的投资大师亦未能幸免。“奥马哈先知”沃伦-巴菲特旗下伯克希尔哈撒韦(200000, 320.00, 0.16%)公司有望创下自2008年以来的最糟糕表现。
2015年迄今，伯克希尔A股和B股均下跌13%左右。公司上次如此糟糕的表现还要追溯至2008年，那一年伯克希尔两类股均下跌32%。诚 然，因金融危机和大衰退，2008年对每一位投资者都为一个梦魇之年。尽管如此，伯克希尔2008年表现仍跑赢标普，标普500指数当年下挫38.5%。
今年，巴菲特的表现未能跑赢市场，尽管标普500指数也是下跌，但跌幅仅为2%。
伯克希尔哈撒韦上一次录得年度下跌并跑输标普500指数要追溯到更早的1999年。当年，标普500指数上涨19.5%，而伯克希尔A股和B股分别下跌20%和22%。
尽管今年市场整体出现下跌，但与1999年相比还是有一些共同点，能够帮助我们理解为何伯克希尔的投资表现会不及标普500指数。
1999年，大型科技股表现一飞冲天。而今年，科技股同样成为市场指数没有出现大幅下挫的重要原因之一。
今年迄今，奈飞(118.16, 1.92, 1.65%)公司（Netflix）和亚马逊(663.7, 0.55, 0.08%)股价均翻了一倍还多，Alphabet（谷歌(750.31, 0.31, 0.04%)）上涨超过40%，Facebook(104.63, -0.88, -0.83%)涨超30%。就像巴菲特当年未涉足微软(55.82,0.47, 0.85%)、思科(27.4, 0.51, 1.90%)、高通(49.04, -0.02, -0.05%)及 Sun Micros 一样，今年巴菲特也未投资上述“科技四巨头”。
这会损及伯克希尔的表现。另外更糟糕的事实是，伯克希尔的诸多重仓股股价出现下跌。
IBM(138.54, 0.61, 0.44%)为伯克希尔持有的为数不多的科技股之一，今年以来下跌15%，该公司为伯克希尔第四大重仓股。以下为伯克希尔前20大投资组合中的部分股票，它们今年以来的表现同样拖累了伯克希尔的投资收益：
美国运通（AXP）：下跌26.5%（第五大持股）
宝洁(79.92, 0.32, 0.40%)（Procter & Gamble）（PG）：下跌13.8%（第七大持股）
沃尔玛(61.09, 0.55, 0.91%)（wal - mart）：下跌31.5%（第九大持股）
达维塔医疗（DVA）：下跌了9.4%（第十大持股）
高盛(182.95, 2.90, 1.61%)（GS）：下跌8.9%（第十三大持股）
迪尔公司（Deere & Co）（DE）：下跌14.9%（第十七大持股）
USG公司（USG）：下跌14.5%（第二十大持股）
Tuesday, December 22, 2015
詐傻扮懵的美國佬
許多學者及政治新聞記者早就用跛腳鴨來形容奧巴馬，實際上，奧巴馬在美國境內的支持率亦相當低迷，加上最近世界局勢天下大亂，所以好多人都講，美國似乎已經無法再繼續引領全球，在強國也出現許多偽專家、偽學者重複這番言論。
2013年9月，奧巴馬對於當時的敘利亞局勢惡化，索性放軟手腳，無力干預，直接話：「美國又不是世界警察」，敘利亞內戰、烏克蘭擊落馬來西亞客機、ISIS伊斯蘭國激進派抬頭、以色列及巴勒斯坦的紛爭也沒有平息的跡象，在亞洲，強國、越南、菲律賓及日本之間的領土糾紛日漸嚴重。無論是在中東、敘利亞、或者是伊拉克、亞洲、烏克蘭等事務、幾乎完全不介入，一切世界大事與我無關，。
習近平這個中國夢，如果想在2021年共產黨建黨一百年成為世界第一大國，相對美國就必須有顯著的衰退，儘管世界經濟成長放緩，但整體仍是零和遊戲 Zero-Sum Game，也是就是說，中國如果要掌握世界霸權，必須獲得目前美國的承認及Blessing，然而美國究竟會不會願意承認這個事實呢？首先我們要探討一下美國到底是不是真的衰退。
我們認為美國目前這種狀態，很可能是故意展現給外界睇，是詐傻扮懵，美國目前每一個領域都具備殺手級力量，第一，就是強大軍事力量，無人能及；第二，就是能源支配力量；第三，同樣支配全球經濟的創新科技。軍事力量毋需多說，我們來看看能源支配及創新科技，早兩三年信報林行止先生對美國的頁岩氣革命大幅報道。自2009年起，頁岩氣技術大突破，從地底3000到10,000公尺取出源源不絕的天然氣，而且副產品提煉出Tight Oil品質實在太好，入便嘅Condensate Gasoline同樣擁有高經濟價值，一桶等於一點六桶原油的價值，我本來對頁岩氣革命還半信半疑，心想頁岩氣革命只可能是吹水炒炒股票，不過觀察近期能源市場的動向，逐漸覺得頁岩氣革命是玩真的。頁岩層遍布美國的地底，已經是事實，其中蘊藏大量天然氣，甚至被認為可以支持美國能源消耗達一百年，如此一來，美國將由世界最大的能源輸入國，變成輸出國，這個分水嶺將會於2020到來。
2013年9月，奧巴馬對於當時的敘利亞局勢惡化，索性放軟手腳，無力干預，直接話：「美國又不是世界警察」，敘利亞內戰、烏克蘭擊落馬來西亞客機、ISIS伊斯蘭國激進派抬頭、以色列及巴勒斯坦的紛爭也沒有平息的跡象，在亞洲，強國、越南、菲律賓及日本之間的領土糾紛日漸嚴重。無論是在中東、敘利亞、或者是伊拉克、亞洲、烏克蘭等事務、幾乎完全不介入，一切世界大事與我無關，。
習近平這個中國夢，如果想在2021年共產黨建黨一百年成為世界第一大國，相對美國就必須有顯著的衰退，儘管世界經濟成長放緩，但整體仍是零和遊戲 Zero-Sum Game，也是就是說，中國如果要掌握世界霸權，必須獲得目前美國的承認及Blessing，然而美國究竟會不會願意承認這個事實呢？首先我們要探討一下美國到底是不是真的衰退。
我們認為美國目前這種狀態，很可能是故意展現給外界睇，是詐傻扮懵，美國目前每一個領域都具備殺手級力量，第一，就是強大軍事力量，無人能及；第二，就是能源支配力量；第三，同樣支配全球經濟的創新科技。軍事力量毋需多說，我們來看看能源支配及創新科技，早兩三年信報林行止先生對美國的頁岩氣革命大幅報道。自2009年起，頁岩氣技術大突破，從地底3000到10,000公尺取出源源不絕的天然氣，而且副產品提煉出Tight Oil品質實在太好，入便嘅Condensate Gasoline同樣擁有高經濟價值，一桶等於一點六桶原油的價值，我本來對頁岩氣革命還半信半疑，心想頁岩氣革命只可能是吹水炒炒股票，不過觀察近期能源市場的動向，逐漸覺得頁岩氣革命是玩真的。頁岩層遍布美國的地底，已經是事實，其中蘊藏大量天然氣，甚至被認為可以支持美國能源消耗達一百年，如此一來，美國將由世界最大的能源輸入國，變成輸出國，這個分水嶺將會於2020到來。
美國是全球最大的能源輸入國，隨着對石油的需求，也產生對中東各國支配的必要性，因此美國過去四十多年一直介入中東各國事務，以美元、美債、穩定及維持世界霸權，由上世紀石油危機延續到今日。
換句話說，中東就是美國在支配全球不可或缺的生命線。而中國、日本，八九成的石油也是靠中東進口，所以中東最對中國來說也是生命線。然而，由於頁岩氣新革命，美國很可能不再需要中東的石油了，如果頁岩氣能夠取代石油，美國就沒有必要繼續確保在中東的利益，亦不需再扶植伊拉克等國的親美政權，也無需要將第五艦隊(United States Fifth Fleet)部署在巴林，這些已經是波斯灣戰爭年代的思維，完全跟不上時代，Out 啦。
油價每桶已經跌破35美元，創下2008年以來新低，當時由於金融海嘯殺到，油價曾經低到每桶36點61美元，隨後在2012年反彈到100美元一桶，但是最近一兩個月，壞消息不斷，石油輸出國組織OPEC協商，原本市場預期每日3150萬桶的生產上限沒有調高，而且不再設上限，多年來被經濟制裁的伊朗殺到，2016年1月才開始供應石油。(伊朗以前是僅次沙地阿拉伯的第二石油出口大國)
OPEC開會之前，本來市場還有一線希望，希望大家能夠聯誼一下減產，但是目前OPEC產量只佔全球需求量的三成，己經冇乜影響力，而且沒有約束力，大家為咗自己的荷包，踩油增產拿Market Share才是上上之策。
OPEC開會之前，本來市場還有一線希望，希望大家能夠聯誼一下減產，但是目前OPEC產量只佔全球需求量的三成，己經冇乜影響力，而且沒有約束力，大家為咗自己的荷包，踩油增產拿Market Share才是上上之策。
這個動作，去年沙地阿拉伯就已經貫徹地執行，油價先破100、再破70，50，35就是這原因。沙地油王殺價搶市的動作，明顯是針對美國頁岩油業者而來。
不管是地緣政治風險，包括俄羅斯制裁的威脅之下，轟炸敘利亞，或者伊朗重返市場，這些都是政治上的陰謀論，講到錢，大家都冇理咁多，因為無錢就萬萬不能。
許多人批評奧巴馬態度軟弱，其實他的軟弱只是體現在外交層面，我認為這是故意的詐傻扮懵，正因如此，比支那人以為有機可乘，繼續發佢個中國夢。
如果頁岩氣革命進一步發展，美國經濟將會穩健復甦，而這個結果將會對世界各國的權力平衡帶來重大影響，目前大家見到世界的亂局只不過是暫時性，美國加息，美元升值，碟仙歸位，萬佛朝宗，電費油費維持低廉的價格，原本在海外設廠的製造業紛紛回歸美國，境內所有產業都逐漸回復生機，如此這樣，你話2016年的投資應該如何部署呢？
對於80後、70後、60後來說，今天的的確確有一種危機叫「外面的世界很精彩無限，卻與你無關。」「年輕人的世界更精彩無限，卻跟你無關。」
係咪要跟我們走番轉？
金銀市短期再陷反复
加息金價跌」，人們普遍認為是真理，其實這並非真理，不過在當前卻可能是真理。
《華爾街日報》最近一句話反映大多數人的共識︰向更高息率的轉移，預期會傷害金價，持有黃金無利息且有保管成本。然而，歷史告訴我們，在美國利率上升時期，金價實際上大多數是上升的。
兩 者同步最典型是在1972至1975年，尤其是1976年秋至1980年初期間，金價與美國聯邦基金利率呈正相關關係，兩者同向上升。令人最難忘的是在 1980年1月基金利率升至17.5厘高水平，金價則創出當時歷來最高價850美元。可是，美國利率與金價的同向關係並非固定。 2001至2004年，在聯邦基金利率下跌期間，金價報升。在2004至2007年期間，聯邦基金利率回升，金價卻繼續上升。到2007至2010年秋， 美國利率持續大幅下降到接近零的水平，金價與之呈明顯的負相關關係，漲升到新的歷史高位1923美元。
實質利率才是關鍵
然 而此後，由2011年到最近，聯邦基金利率維持在接近零的水平，金價卻從高峰反復回落，最近曾見1045美元，跌幅達45.6%。上週聯儲局把聯邦基金利 率調升0.25厘，並表示將會循序漸進再加息，揭開了加息週期帷幕。此時不少外國分析嘲笑「加息金價跌」的共識，指出這是錯誤觀念，認為日後將如過去大多 數時間一樣，金價將隨利率回升而上升。不過，另有分析者提出異議，其所持理據當然不是低層次的「人們共識」，而是影響金價的不是名義利率，而是實質利率 （即名義利率減去通脹率）。
七十年代，由於通脹惡化，儘管名義利率不斷調升，但仍趕不上通脹上升的速度，以致實質利率兩度低於負5厘水 平，造成金價與名義利率同升。 2009至2011年，名義利率被調低至零水平，造成實質利率處於負值狀態，金價遂與名義利率背馳而大升。其後聯邦基金利率雖然幾無變動，但因通脹率下 滑，實質利率從負3.5厘水平回升，金價故從高峰反復回落。
上週名義利率提升了，但商品價格依然下滑，這使實質利率約有正0.7厘的水平，諒金價難以隨同利率上升。
敝欄傾向後一派的觀點，即視為未來一段時間，金價難以伴隨名義利率同升。
金價守1045 銀市14.4遇阻
不 過上述爭議仍持續，市場看法亦不一致，體現於上週聯儲局議息前後的市況上下波動。週四金價一度跌回到1046.8美元，僅略高於本月初的最低點 1045.4美元，然而，在此觸發淡倉再回補及部分新買盤入市。技術上的可能雙底亦引起牛派的憧憬，除了期金市的未平倉合約量大幅回增外，週五SPDR持 金量亦從630.17噸回增至648.91噸。
美元回順而美債價回升是有利因素。因此，敝欄在認為金市中長期未轉勢的前提下，估計短期金價可守住1045美元，而不致進一步跌至1035元，且支持暫上移至1052美元；但在1080美元會有阻力，較大的阻力仍在1097美元。換言之，金市續在近兩月低位反复。
銀 市上週曾創大調整市的新低13.62美元，但守住敝欄上期估計的支持13.5美元。上周銀市反复劇烈程度勝金市，有人認為銀市的值博率更高，但對沖基金的 淨沽倉量再創此項新紀錄。現估計銀市的支持仍分別在13.5美元及13.65美元，且暫上移至13.8美元；但在14.4美元會有阻力，較大阻力仍為 14.7美元。
金銀兩市尚未見大量新資金流入，在交投較淡靜的聖誕節前夕，或有頗飄忽的行情出現。
《華爾街日報》最近一句話反映大多數人的共識︰向更高息率的轉移，預期會傷害金價，持有黃金無利息且有保管成本。然而，歷史告訴我們，在美國利率上升時期，金價實際上大多數是上升的。
兩 者同步最典型是在1972至1975年，尤其是1976年秋至1980年初期間，金價與美國聯邦基金利率呈正相關關係，兩者同向上升。令人最難忘的是在 1980年1月基金利率升至17.5厘高水平，金價則創出當時歷來最高價850美元。可是，美國利率與金價的同向關係並非固定。 2001至2004年，在聯邦基金利率下跌期間，金價報升。在2004至2007年期間，聯邦基金利率回升，金價卻繼續上升。到2007至2010年秋， 美國利率持續大幅下降到接近零的水平，金價與之呈明顯的負相關關係，漲升到新的歷史高位1923美元。
實質利率才是關鍵
然 而此後，由2011年到最近，聯邦基金利率維持在接近零的水平，金價卻從高峰反復回落，最近曾見1045美元，跌幅達45.6%。上週聯儲局把聯邦基金利 率調升0.25厘，並表示將會循序漸進再加息，揭開了加息週期帷幕。此時不少外國分析嘲笑「加息金價跌」的共識，指出這是錯誤觀念，認為日後將如過去大多 數時間一樣，金價將隨利率回升而上升。不過，另有分析者提出異議，其所持理據當然不是低層次的「人們共識」，而是影響金價的不是名義利率，而是實質利率 （即名義利率減去通脹率）。
七十年代，由於通脹惡化，儘管名義利率不斷調升，但仍趕不上通脹上升的速度，以致實質利率兩度低於負5厘水 平，造成金價與名義利率同升。 2009至2011年，名義利率被調低至零水平，造成實質利率處於負值狀態，金價遂與名義利率背馳而大升。其後聯邦基金利率雖然幾無變動，但因通脹率下 滑，實質利率從負3.5厘水平回升，金價故從高峰反復回落。
上週名義利率提升了，但商品價格依然下滑，這使實質利率約有正0.7厘的水平，諒金價難以隨同利率上升。
敝欄傾向後一派的觀點，即視為未來一段時間，金價難以伴隨名義利率同升。
金價守1045 銀市14.4遇阻
不 過上述爭議仍持續，市場看法亦不一致，體現於上週聯儲局議息前後的市況上下波動。週四金價一度跌回到1046.8美元，僅略高於本月初的最低點 1045.4美元，然而，在此觸發淡倉再回補及部分新買盤入市。技術上的可能雙底亦引起牛派的憧憬，除了期金市的未平倉合約量大幅回增外，週五SPDR持 金量亦從630.17噸回增至648.91噸。
美元回順而美債價回升是有利因素。因此，敝欄在認為金市中長期未轉勢的前提下，估計短期金價可守住1045美元，而不致進一步跌至1035元，且支持暫上移至1052美元；但在1080美元會有阻力，較大的阻力仍在1097美元。換言之，金市續在近兩月低位反复。
銀 市上週曾創大調整市的新低13.62美元，但守住敝欄上期估計的支持13.5美元。上周銀市反复劇烈程度勝金市，有人認為銀市的值博率更高，但對沖基金的 淨沽倉量再創此項新紀錄。現估計銀市的支持仍分別在13.5美元及13.65美元，且暫上移至13.8美元；但在14.4美元會有阻力，較大阻力仍為 14.7美元。
金銀兩市尚未見大量新資金流入，在交投較淡靜的聖誕節前夕，或有頗飄忽的行情出現。
Friday, November 6, 2015
Joel Greenblatt – The Magic Superinvestor - Lanber
We are starting a series profiling superinvestors that have made a big impact in the value investing world.
Isaac Newton once said that “If I have seen further than others, it is by standing upon the shoulders of giants.” I hope that through this series you’ll discover new superinvestors to learn from in order to further sharpen your own thinking.
Up first is Joel Greenblatt. He doesn’t need much of an introduction.
The mastermind behind the simple and effective magic formula, holder of one of the best 10 year investment records at 40-50% CAGR.
Considering that Greenblatt describes himself as self-taught in the ways of value investing after reading Graham’s quant based investing strategies, his results are even more impressive. Then throw in some additional accolades like being an adjunct professor at Columbia University and being classified as a superinvestors at such a young age.
We know all about the magic formula, but investors don’t really know much about Greenblatt himself of Gotham funds.
Let’s dive into some details and get to know Greenblatt a little better.
He was confident in a dog named Lucky which had a 99-1 chance of winning. He was a sure bet because he was fast in all the previous races.
But Lucky was unlucky and lost.
However, Greenblatt realized that Lucky performed best in short races and this story provides a glimpse into Greenblatt’s mechanical approach to investing.
At 15 years old Joel took this lesson to heart. Betting with just a good story and not knowing the facts will only cost money.
He argued that if you don’t know the fundamentals you will lose. This follows closely Graham’s philosophy of value investing.
The idea of the magic formula is to provide
The original magic formula numbers first.
And old school value’s variation of the magic formula compared with the original and the market.
It’s not the 30% claimed in the book or the 18.57% return. However, the old school variation produced a 13.74% CAGR which easily beats the market return of 0.9% over the same period.
But when you consider that value investing itself isn’t popular with mainstream investing and the magic formula is just a subset of value investing, there is plenty of room before it ever gets crowded.
Even if the magic formula has lost some of its glimmer, the truth is that no investing strategy will work 100% of the time.
Investors need to believe in their system even if it’s not working in the short term. “Short term” isn’t 1-6 months. As of today, Gotham funds have been underperforming the market for a few years, but it’s still too short to claim whether a system is working or not. Especially when the system has been proven before and backtested evidence shows that it works.
Greenblatt believes that consistency is key to his fund’s success and if you look at the quotes section below, you’ll notice his emphasis on sticking with the long term and not getting pushed out of a strategy due to short term underperformance.
Most value investors have read his special situation book, You Can be a Stock Market Genius.
In fact, you can download and read notes to Greenblatt’s Columbia Business School special situation class from a decade ago thanks to John Chow from CS Investing who was the auditor of his lectures.
Also, here’s another good link that provides notes to a 2006 lecture from Greenblatt’s value investing class video going over some of his previous stocks.
Now when selling stocks, Joel Greenblatt takes the same objective and simple approach.
Consistency is key right?
Isaac Newton once said that “If I have seen further than others, it is by standing upon the shoulders of giants.” I hope that through this series you’ll discover new superinvestors to learn from in order to further sharpen your own thinking.
Up first is Joel Greenblatt. He doesn’t need much of an introduction.
The mastermind behind the simple and effective magic formula, holder of one of the best 10 year investment records at 40-50% CAGR.
Considering that Greenblatt describes himself as self-taught in the ways of value investing after reading Graham’s quant based investing strategies, his results are even more impressive. Then throw in some additional accolades like being an adjunct professor at Columbia University and being classified as a superinvestors at such a young age.
We know all about the magic formula, but investors don’t really know much about Greenblatt himself of Gotham funds.
Let’s dive into some details and get to know Greenblatt a little better.
Lessons Joel Greenblatt After Gambling Money in a Dog Race
When Joel Greenblatt was 15 he had the chance to make some bets in a dog racing circuit.He was confident in a dog named Lucky which had a 99-1 chance of winning. He was a sure bet because he was fast in all the previous races.
But Lucky was unlucky and lost.
However, Greenblatt realized that Lucky performed best in short races and this story provides a glimpse into Greenblatt’s mechanical approach to investing.
At 15 years old Joel took this lesson to heart. Betting with just a good story and not knowing the facts will only cost money.
He argued that if you don’t know the fundamentals you will lose. This follows closely Graham’s philosophy of value investing.
- Do your own work
- Don’t trust anyone over 30
- Don’t trust anyone 30 or under
Joel Greenblatt’s Magic Formula Approach – Keep it Simple
In his book, The Little Book that Beats the Market, Greenblatt explains his magic formula method on how to buy mispriced stocks with top earnings yield and high ROIC.The idea of the magic formula is to provide
A long-term investment strategy designed to help investors buy a group of above-average companies but only when they are available at below-average prices.Joel Greenblatt’s magic formula was previously tested on old school value with a heavy dose of skepticism, but numbers don’t lie. See for yourself.
If I plug my estimates into the Magic Formula, and it comes out cheap, that’s good.
The original magic formula numbers first.
And old school value’s variation of the magic formula compared with the original and the market.
It’s not the 30% claimed in the book or the 18.57% return. However, the old school variation produced a 13.74% CAGR which easily beats the market return of 0.9% over the same period.
How Long Will the Magic Formula Work?
There’s been a lot of discussion about whether the magic formula has lost its touch. The argument is that because the book became a best seller, more people know about it and it is now a crowded strategy now.But when you consider that value investing itself isn’t popular with mainstream investing and the magic formula is just a subset of value investing, there is plenty of room before it ever gets crowded.
Even if the magic formula has lost some of its glimmer, the truth is that no investing strategy will work 100% of the time.
Investors need to believe in their system even if it’s not working in the short term. “Short term” isn’t 1-6 months. As of today, Gotham funds have been underperforming the market for a few years, but it’s still too short to claim whether a system is working or not. Especially when the system has been proven before and backtested evidence shows that it works.
Greenblatt believes that consistency is key to his fund’s success and if you look at the quotes section below, you’ll notice his emphasis on sticking with the long term and not getting pushed out of a strategy due to short term underperformance.
Investment Strategies of Joel Greenblatt
Joel Greenblatt isn’t just known for the magic formula. He is likely the one that really brought special situations to value investors. Sure Buffett wrote about workouts in his letters before Greenblatt even got started, but when it comes to teaching about special situations, Greenblatt is the best.Most value investors have read his special situation book, You Can be a Stock Market Genius.
In fact, you can download and read notes to Greenblatt’s Columbia Business School special situation class from a decade ago thanks to John Chow from CS Investing who was the auditor of his lectures.
Also, here’s another good link that provides notes to a 2006 lecture from Greenblatt’s value investing class video going over some of his previous stocks.
Now when selling stocks, Joel Greenblatt takes the same objective and simple approach.
Consistency is key right?
I usually try to sell before my investment reaches a conservative estimate of fair value. In other words, I usually sell too early. In addition, I may sell before an investment reaches even that discount to conservative fair value if I find something else a lot cheaper and it makes sense to make the exchange after looking at my overall portfolio.This quote ties in very much with the magic formula where stocks are sold after one year.
Joel Greenblatt Famous Quotes
Here is part of the tradeoff with diversification. You must be diversified enough to survive bad times or bad luck so that skill and good process can have the chance to pay off over the long term.
Many studies over the years have confirmed that value-oriented strategies beat the market over longer time horizons. Several different measures of value have been shown to work. These strategies include, but are not limited to, selecting stocks based upon low ratios of price to book value, price to earnings, price to cashflow, price to dividends… these simple value strategies do not always work. However, measured over longer periods, they do. Though these strategies have been well documented over many years, most individual and professional investors do not have the patience to use them. Apparently the periods of underperformance makes them difficult – and, for some professionals, impractical to implement.
If your goal is to beat the market, an MBA or a Ph.D. from a top business school will be of virtually no help.
If you spend your energies looking for and analyzing situations not closely followed by other informed investors, your chance of finding bargains greatly increases.
Look down, not up, when making your initial investment decision. If you don’t lose money, most of the remaining alternatives are good ones.
There’s a virtuous cycle when people have to defend challenges to their ideas. Any gaps in thinking or analysis become clear pretty quickly when smart people ask good, logical questions. You can’t be a good value investor without being an independent thinker – you’re seeing valuations that the market is not appreciating. But it’s critical that you understand why the market isn’t seeing the value you do. The back and forth that goes on in the investment process helps you get at that.
You do have to do your homework.
You do have to have the right framework.
You have to screw up a bunch and learn from it.
Each mistake leads to better insights and subtleties.
I think business school is a very personal decision. I love Columbia and I think they have a great value investing program but there is nothing that is taught there that you can’t learn on your own. Becoming a good investor is about reading, learning and practicing and then practicing some more.
Where to Find Magic Formula Stocks and Greenblatt Inspired Stocks
- The official magic formula stock screener
- Value Investors Club operated by Greenblatt – sign up for free
- Magic formula screen at old school value
- Magic Diligence stock newsletter
Must Read Books by Joel Greenblatt for ALL Value Investors
Other Joel Greenblatt Dedicated Resource Pages
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