Four Magic Formula Picks for a Stretched Market

While there are many that believe today’s stock market is “frothy,” Warren Buffett argues, “measured against interest rates, stocks actually are on the cheap side compared to historic values.” This according to a Nasdaq article by Validea CEO John Reese. Reese weaves this argument into a discussion about the investment strategy he created based on the philosophy of Joel Greenblatt–author of The Little Book that Beats the Market (2005) –that focuses on earnings yield and return-on-capital as the “magic formula” for picking stocks. He identifies four names that earn high marks based on these two metrics (along with their ranking […]

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: […]