In a recent Forbes article, Validea CEO John Reese shared a list of core investing concepts outlined in an essay for the CFA institute by Vanguard founder Jack Bogle, and offered parallels with tenets of market gurus such as Warren Buffett, Peter Lynch, and Joel Greenblatt: Invest you must. Failure to earn an adequate return is riskier than short term market volatility. According to Joel Greenblatt: “The strategy of putting all your eggs in one basket and watching that basket is less risky than you might think.” Time is your friend. Benjamin Graham referred to compounding as the “eighth wonder […]
Joel Greenblatt, managing partner of Gotham Asset Management, may have figured out a way to make active strategies appeal to passive investors, according to a recent article in Forbes. The legendary investor and author of The Little Book that Beats the Market (2010) has started a new fund called the Gotham Index Plus Fund that seeks to bend passive an active management strategies by tracking the S&P 500 and using it, the article says, as an “overlay strategy to build a long/short exposure based on Gotham’s value models.” The article outlines a recent interview with Greenblatt. Here are some highlights: […]
Hedge fund manager and author Joel Greenblatt says that the majority of top mutual fund managers spent at least three years lagging well behind others, says a CNBC article by Validea CEO John Reese. This, however, is something short-term investors tend to run from, Reese writes. An unfortunate move, since over the long-term these same managers tend to outperform. He argues, “Reaching for returns that beat the benchmark requires the emotional discipline to stick with an investment manager through thick and thin, knowing that no strategy can beat the market all the time.” Reese uses the example of Warren Buffett, […]
Most investors lack patience and don’t understand underperformance, which motivates them to abandon funds when performance dips—precisely the time they shouldn’t, says Joel Greenblatt, co-founder of Gotham Asset Management. In a recent Forbes article, Validea CEO John Reese explains the fundamentals of Greenblatt’s “Magic Formula,” which uses return-on-capital and earnings yield to identify good companies selling for bargain prices. Reese identified the top ten Magic Formula picks and, including the following four that also earn high marks from other guru strategies: Natural Health Trends (NHTC) is a direct-selling and e-commerce company that sells personal care, wellness and quality-of-life products. In […]
Guru investor Joel Greenblatt—Columbia University professor and co-founder of Gotham Asset Management–has consistently made a strong case for value investing and created a series of hedge funds and mutual funds that would go long cheap stocks and short expensive stocks. However, in a recent interview with Barron’s, Greenblatt explains how underperformance and investor frustration led his firm to launch an index fund (Gotham Index Plus), which has been outperforming the S&P 500. The reason? Investors don’t adhere to investment styles that underperform. “While value investing works over the long term, and in the vast majority of cases within two or […]
“Most people have a tough time sticking with active managers who underperform for a period of time. But of course, if you’re going to beat the market, you have to do something different than the market. And active managers will zig and zag differently,” explains Joel Greenblatt, founder of Gotham Asset Management, in a recent interview with Morningstar. Greenblatt discusses his firm’s disciplined valuation process that uses both absolute and relative value metrics to rank the 2,000 companies in its database, “We stick to it. It works over time.” According to Greenblatt, the vast majority of investors lack the experience […]
Hedge fund manager Joel Greenblatt, author of The Little Book that Beats the Market, uses what he calls a “magic formula” to earn returns that outperform the market. In a recent article for TheStreet.com, John Reese, CEO of Validea, explains Greenblatt’s strategy of focusing on return-on-capital and earnings yield to find “good companies at bargain prices.” But this straightforward, seemingly simple strategy is no magic bullet. It is based on a long-term view (3 to 5 years) and requires discipline to stay the course and ride out short term bumps in the road. Here are five stocks that earn high […]
“I think the big move now is from active [investing] to passive, and that’s good for most people,” says Joel Greenblatt, Managing Principal of Gotham Asset Management and the guru Validea’s “Earnings Yield Investor” is based on. In a recent interview with CNBC, Greenblatt shared his opinion that “most people shouldn’t be picking individual stocks unless they know how to value businesses. That’s hard work, and a full time job.” When it comes to selecting active funds, investors are faced with challenges as well. For example, investors need to use their judgement and research to determine which fund managers are […]
Why did top strategist Joel Greenblatt change his investment strategy from a highly concentrated one to one that invests in hundreds of stocks? That is one of the many interesting topics Greenblatt covers in a recent interview with WealthTrack.
Hedge fund guru Joel Greenblatt says that the large-cap universe is looking a lot more attractive than the small-cap space from a valuation perspective right now.
Every other issue of The Validea Hot List newsletter examines in detail one of John Reese’s computerized Guru Strategies. This latest issue looks at the Joel Greenblatt-inspired strategy, which has averaged annual returns of 10.7% since its late 2005 inception vs. 5.3% for the S&P 500. Below is an excerpt from the newsletter, along with several top-scoring stock ideas from the Greenblatt-based investment strategy. Taken from the September 12, 2014 issue of The Validea Hot List
Hedge fund guru Joel Greenblatt says he’s seeing a wide disparity in the way the current market values large stocks and small stocks.
While people often use the words simple and easy to describe the same thing, there’s a big difference — a difference Validea CEO John Reese says has big implications in investing.
Hedge fund guru Joel Greenblatt is known for the “Magic Formula” approach that he laid out in his Little Book That Beats The Market. But more than two decades before that, Greenblatt detailed another strategy that may have even more magic in it, according to ValueWalk.
In his latest column for Forbes.com, Validea CEO John Reese invokes mutual fund legend Peter Lynch in discussing the importance of staying disciplined when the market gets rough.