Investment Philosophy

Thoughts On Return On Capital And Greenblatt’s Magic Formula Part 2

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In part 1 of this post, I mentioned I caught a video interview with Joel Greenblatt at Morningstar. In the video, Greenblatt talks about indexing, and things that are not necessarily interesting to me and my investment strategy, but he also had some brief comments on Return on Capital. In the last post, I discussed the basic method that Joel Greenblatt uses to define Return on Capital. I also discuss some of the fundamentals and the importance of this key […]

General Thoughts

Thoughts on Return on Capital and Greenblatt’s Magic Formula Part 1

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I recently watched a video of Joel Greenblatt with Morningstar. Most of the video discusses the index approach to investing using a value weight (as opposed to equal weight or market weight, which most indexes use). I’m not that interested in indexing, although for individuals who want completely passive exposure to stocks, value weighting certainly makes much more sense to me than market weighting (because market weighting systematically buys more of a stock as it goes up, thus forcing you […]

General Thoughts

“Magic Formula” and Other Quantitative Results from 2013–Should the Computers Takeover?

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Let me say that the following few sentences only represent my humble opinion. There are many smart, talented, and successful practitioners that participate in the field that I am about to comment on… (Editor side note: unlike many who take pride in saying things such as “I tell it like it is”, or “I don’t care what others think”… I happen to dislike offending others and I do care what others think, but evidently I’m in the minority here. I […]

General Thoughts

Some Thoughts on Joel Greenblatt’s Magic Formula and its YTD Results

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“Value investing is simply figuring out what something is worth and paying a lot less for it” – Joel Greenblatt I often describe my investment philosophy as a synthesis of ideas from Ben Graham, Walter Schloss, Warren Buffett, and Joel Greenblatt. At the core of my strategy is Graham and Schloss’ quantitative methods for valuing stocks. It’s far more difficult to make mistakes when you simply make obvious, simple decisions based on valuation. In each investment, I want to ensure […]

General Thoughts

To Arbitrage, or Not to Arbitrage

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I just spent all afternoon reading through all of Warren Buffett’s original partnership letters. These are the letters that he wrote to his investors when he was managing his private partnership from 1956-1969 prior to taking control of Berkshire Hathaway. I’ve read through these letters numerous times, and I recommend them to anyone who is serious about truly understanding the methods of Buffett. A while back I printed them and bound them so I have them collected in one place […]