Magic Formula Investing

Follow Me at Value Investing HQ

Alexg — Fri, 16 Dec 2011 15:18:54 +0000

Value Investing got the best of me again. After taking a long needed break from the markets, I decided to hit the blogging scene again. I’m as rejuvenated as ever and the blog is already picking up some momentum. I also found some nice golden nuggets such as my article on Warren Buffett 10 rules Jimmy Johns.

No related posts.

Magic Formula Stocks On The Move 3-27-2011

Alexg — Sun, 27 Mar 2011 14:04:52 +0000

Each week I track which stocks are moving in and out of the top 30 from the Magic Formula Screen. This screen in ran for companies with a minimum market cap of 50.Here are the moves for the week ended 3-27-11 on the top 30 list.
Top 30/50 Million:

In:

New Energy Systems Group (NEWN)
PDL BioPharma, Inc. (PDLI)

Out:

Guanwei Recycling Corp (GPRC)
United Online, Inc. (UNTD)

Magic Formula Stocks On The Move 10-9-2010

Alexg — Sat, 09 Oct 2010 15:45:56 +0000

In:

H&R Block, Inc. (HRB)
pSivida Corp. (PSDV)
Zalicus Inc. (ZLCS)

Out:

Almost Family Inc. (AFAM)
CombinatoRx (CRXX)
DragonWave Inc. (DRWI)

Joel Greenblatt Launches New Fund

Alexg — Wed, 06 Oct 2010 02:58:15 +0000

“I’ve been making money over the years, and we have adopted those into a quantitative framework,” says Greenblatt. “But it is still driven by our investor skills.”

Joel Greenblatt is launching Gotham Asset Management LLC. according to a Business Wire press release. According to the press release, the firm will offer “domestic and international value strategies.”

Congratulations to Joel Greenblatt for getting back in the game. I have been a fan of his for a long time and his Little Book That Still Beats The Market is the main reason this website exists. Below is the press release that hit the wires today.

NEW YORK–(BUSINESS WIRE)–Joel Greenblatt today announced the formation of the equity management firm Gotham Asset Management, LLC, a registered investment advisor. The company will be offering a suite of domestic and international value investing strategies, with a focus on the institutional segment of the market. Joel Greenblatt will serve as Managing Principal and co-CIO for Gotham Asset Management, LLC.

Gotham Asset Management will deliver over 25 years of investment expertise by implementing the proprietary fundamental value discipline developed by Greenblatt and his team of 16 investment professionals. Institutional strategies have been developed using a quantitative framework for both the domestic and international markets.

Robert Goldstein will serve as Managing Principal and co-CIO alongside Greenblatt. K. Blake Darcy will serve as the CEO of Gotham Asset Management. Greenblatt outlined his value investing philosophy in The Little Book That Beats the Market. The book’s success led to the recent publication of The Little Book That Still Beats the Market, an updated and expanded edition of the book with new and timely research, analysis and material by Greenblatt.

Stock Market Software For Free

Alexg — Sat, 02 Oct 2010 18:38:05 +0000

If you’ve new to the stock market you might have done the sensible thing and signed up for a few stock market blogs to get their newsletter delivered directly to your inbox. Nothing wrong with that. In fact it makes perfect sense to get as much information as you possibly can especially when you’re just starting out. The problem is that there are so many so called gurus out there who’ll play on your naivety to simply try and sell you a product. They’ll market it as the next best thing. It’ll make you a millionaire in a matter of weeks! Not exactly. If they had software like this do you really think they’d be selling it? Of course now they’d be keeping it for themselves!

Forget the rubbish the gurus are trying to sell you as the best stock market software out there is actually available for free. Don’t believe me? Check out Google Finance. It has so many features its unbelievable for a free product. If you already have a Gmail account you’ll be familiar with the layout and navigation. You also get free access to the wonderful Google News.

To really get a feel for the power of Google Finance you have to try out the stock manager portfolio. If you’re like me and have a portfolio spread across various different companies it can be difficult to keep track of how they are all performing. With Google Finance, this becomes an absolute breeze. All the stocks you own can be shown on one simply screen so you have an at a glance view of your entire holdings. From there you can use the stock screener to work out what your next investment will be. Simply enter a few variables into the filters such as price to earnings ratio and watch Google Finance do it’s magic. You can then export all this information into Google Documents to share with your friends or if you’re part of an investing club. On second thoughts, perhaps you’ll want to keep this information to yourself. Stocks for beginners is difficult enough without helping the competition!

Investment advisor software comes in various different price ranges but in my experience free software can deliver exactly what you need compared to the paid software the stock market gurus are trying to sell you. Sign up for Google Finance today and you might just be amazed at what you find.

Magic Formula Stocks On The Move 10-02-2010

Alexg — Sat, 02 Oct 2010 15:42:04 +0000

In:

Almost Family Inc. (AFAM)
CombinatoRx (CRXX)
DragonWave Inc. (DRWI)

Out:

H&R Block, Inc. (HRB)
pSivida Corp. (PSDV)
Zalicus Inc. (ZLCS)

Joel Greenblatt Discussing The Little Book That STILL Beats The Market

Alexg — Thu, 30 Sep 2010 23:15:38 +0000

This interview is almost two weeks old but I thought the magic formula investing community would be interested in this appearance of Joel Greenblatt on CNBC. I believe it is on the exact date of when The Little Book That STILL Beats The Market was released. The most important comment Joel made in my opinion is around the 1:51 mark in which he states, “the reason it really works (magic formula) is because it doesn’t always work.” As Joel mentions, people quit on a formula when it doesn’t work and the magic formula certainly falls in the category as I have seen several bloggers and magic formula investors on the net give up.

The Best Way to Learn About Stocks – An Investing Club!

Alexg — Wed, 29 Sep 2010 15:45:10 +0000

Within the last few years, I have started to invest in the stock market, and have tried to learn about stocks in a variety of ways. I had always heard that stocks, of all financial products, were the most risky commodity to invest in, and I wanted to make sure I had a good idea about what I was doing before I dove in.

I started out by getting a book on stock investing. It helped, but I really did not learn about stocks as much as I would have liked. I really learned more about how the stock market works and what different things meant, which was very helpful, but not quite what I was looking for when I started researching. You can also research stock market software

I then went and visited with a friend who had made a significant amount of money in the stock market, and there was no question that she was very knowledgeable. The problem was, she was too knowledgeable, and I could not understand why she was investing in certain stocks and avoiding other stocks, or why she was selling that this price or buying at that price.

I found a virtual stock market online that allowed you to learn about stocks by giving every person a million dollars to invest, and then letting you have at it. You had to study the stocks and trends and then invest based on your research.

This was where I finally started to learn about stocks, learning how they performed and why. I did this for about six months until nearly all of the stocks I invested in were turning descent profits. I then decided to move on to the real thing, and opened up an E-Trade account.

It was here that I really started to learn about stocks in a major way, because I had access to all kinds of information on various stocks and how to invest. I became familiar with such publications as the Wall Street Journal and Investor’s Business Daily and knew how to read and understand them, and pretty soon I felt very comfortable buying and selling stocks.

It really was a mixed approach that worked for me when it came to learning about the stock market, and I am really glad that I took the time I needed to understand every facet when it came to that kind of investing.

I did learn about stocks at every level of my studies, but when I really started to understand what they were and what to invest in was when I actually got in there and started working with them on my own. It did not take long, and I think that if a person is determined enough to learn, that is the best way to go.

Why Investing In Stocks Is Difficult

Joel Greenblatt To Launch Value Based Mutual Funds

Alexg — Tue, 21 Sep 2010 13:45:10 +0000

Author and hedge fund manager Joel Greenblatt will soon launch 6 value investing mutual funds based on his magic formula investing system which he described in The Little Book That Beats The Market and his recently released The Little Book That Still Beats The Market.

According to the SEC filing, Greenblatt plans to launch 6 mutual funds all based on the magic formula and his recent research in which he has done on international value stocks (videos below). The mutual funds that will be released are:

Formula Investing U.S. Value 1000 Fund
Formula Investing U.S. Value Select Fund
Formula Investing Global Value Fund
Formula Investing Global Value Select Fund
Formula Investing International Value Fund
Formula Investing International Value Select Fund

Finally, while the mutual funds will try to replicate the magic formula as described in both books, the mutual funds will be more diversified and invest in large cap stocks. According to this Morningstar.com article, the most concentrated U.S. fund will normally invest in 75-120 securities according to the document filed with the SEC as opposed to the 30 stocks he recommends in the little books.

Investment Dictionary: The Basic Jargons

Alexg — Mon, 20 Sep 2010 17:21:06 +0000

More often than not, we encounter words that are unfamiliar to us. From television shows, to newspapers, to other people’s conversations, we sometimes get to hear terms that are new to our ears.

It’s no longer surprising to hear that some people, particularly those who are from outside the business industry, end up scratching their heads when they hear complicated terminologies. Sometimes they wish they brought with them their investment dictionary.

Well, an average person doesn’t have to carry an investment dictionary when dealing with common business matters. One investment advice is that all he has to do is to become familiar with the basic terms of investment. Below is a list of some of the commonly used jargons in the business.

Asset classes – refer to the various kinds of investments. Examples of these are equities, fixed-income, and money market.
Balanced fund – in investment dictionary, it refers to a fund that searches for both growth and revenue, with steadiness of principal, by means of a portfolio that consist both stocks and bonds.
Equities – also referred to as stocks, it represents possession rights in a corporation. A stockholder has a privilege of receiving a share of company’s earnings, often given out as dividends.
Fixed-income securities – more commonly known as bonds in the investment dictionary, these are loans that an individual make to a government or corporation (referred to as the issuer) when it needs to increase the money.
Growth fund – A mutual fund that basically invests in stocks of corporations assumed to have above-average possibility for growth in revenue and earnings. These stocks usually have small dividend earnings and above-average values relative to such measures as revenues and book value.
Mutual fund – refers to a varied, proficiently managed portfolio of securities that combines the assets of individuals and organizations to invest toward a common goal such as existing revenue or long-term expansion.
Portfolio – an investment dictionary term which refers to the combination of securities.
Securities – it refers to the general name used to describe equities, government responsibilities, corporate fixed-income securities, or ownership rights, such as futures or options.

Of course, knowing these terms will not make a person a walking investment dictionary. There are still a myriad of far complicated and technical terms in investment and mastering all of them may take quite a while. Nevertheless, knowing the basics is the first investment advice since this is the language of the business.