Keys to Investing Success and Solid Picks

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 […]

Greenblatt Blends Active and Passive Strategies in New Fund

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: […]

Sometimes Investing Success Means Riding Rough Road

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, […]

Greenblatt’s Magic Formula-Worthy Picks

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 […]

Greenblatt on Gotham’s New Fund

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 […]