Oct 19, 2009
Joel Greenblatt on CNBC
Key notes:
-There are periods of time, could be 2 or 3 years where it underperforms the market. People usually drop the formula if it does that. That prevents it from widely adopted.
-Over the last 5 years the magic formula is up 73% versus 3% for the market.
-Launching an investment fund to do all the work for investors.
-Not a fast trading strategy. Lost a little bit against the market last year. There are periods when it does not do well or can actually lose money.
-Not a great strategy for hedge fund managers. On average these plays do well over time, difficult to hedge out. That’s why it Greenblatt thinks it will continue to work.
-If you look specifically, you’ll pick reasons why you should not buy them individually. But if you buy as a basket it generally works out.
Recent Comments