Joel Greenblatt Talks Value Investing, Investor Emotions and his Magic Formula

In a recent Masters in Business  podcast interview with Bloomberg columnist Barry Ritholtz, investor, professor, author and co-chief investment officer of Gotham Asset Management Joel Greenblatt talks about his early days in investing, the concepts behind his books, and his firm’s investing methodology. Here are highlights from the interview: Greenblatt recalled first becoming interested in Benjamin Graham’s strategy as a junior at the Wharton School.  At the time, he was being taught the efficient market… Read More

Don’t Confuse Luck and Smart Investing

A recent article by Bloomberg columnist Barry Ritholtz warns investors that although huge wins get more attention than smaller, “routine” wins and losses, those windfalls don’t necessarily represent smart investment decisions. “Focusing on a single outcome versus a repeatable process raises more questions than it answers,” Ritholtz writes, including the following: Were the results of the winning trade statistically significant? Was the trade the result of luck or skill? What is the long-term record of… Read More

Stock-Pickers Know How to Buy, But Not Sell

Most money managers are better at buying than selling, according to an article by Bloomberg columnist Barry Ritholtz. This is the conclusion of a report published in January that concludes: “While investors display clear skill in buying, their selling decisions underperform substantially –even relative to strategies involving no skill such as randomly selling existing positions—in terms of both benchmark-adjusted and risk-adjusted returns.” According to Ritholtz, the paper’s most surprising conclusion is this: “Fund managers would… Read More

2019 Predictions Will Miss the Mark, or Worse

A Bloomberg article by columnist Barry Ritholtz notes that this is the time of year when prognostications surface from strategists and analysts but asserts that they are, “for the most part, exercises in futility.” “The problem with forecasts goes beyond their mere lack of accuracy,” he declares, adding, “My critique is with the underlying cognitive and philosophical failing that are associated with the entire forecasting industry: a lack of humility, the assumption of a skill… Read More

Small and Passive is Better in Money Management

A recent S&P report offers deep-dive analysis into mutual fund performance over the past year versus various benchmarks, according to a Bloomberg article by columnist Barry Ritholtz. “Growth stocks are trouncing value,” Ritholtz writes. “Small caps are beating large. And more professional managers are beating their benchmarks now than a year earlier.” Here are some highlights of the findings: For investors in U.S. equity markets, small-cap stocks showed the strongest performance, gaining 20.5 percent, followed by… Read More

Ritholtz on the Stock Market Meltdown

In a recent Bloomberg article, columnist Barry Ritholtz offers a tongue-in-cheek “after-the-fact explanation in great detail and with complete and utter certainty of what just occurred in the markets, and why.” Ritholtz goes on to explain that hindsight renders last week’s “sudden and unexpected decrease in share prices” as obvious, but adds, “the alternative to this soothing narrative is an unimaginable world of random disconcerting events. This stands in stark contrast to how we prefer… Read More

Ritholtz: Index Funds Can Weather Cruel Markets

In an article for Bloomberg, columnist Barry Ritholtz  debates the claim that passive investors will bear the brunt of an equity slump. Specifically, Ritholtz refutes the argument presented by Times of London columnist Ian King citing the dot-com bubble-burst as evidence of “a salutary lesson to those who preach the virtues of index trackers in offering low-cost, low-risk exposure to the stock market.”  Ritholtz characterizes the argument as a “bizarre anecdote, more along the lines… Read More

Index Funds Will Be Fine

A recent Bloomberg article by columnist Barry Ritholtz argues that, despite the maturation in index investing and a slowdown in inflows to passive funds, “indexing is still giving active funds plenty of competition.” The decade following the financial crisis, writes Ritholtz, saw “rivers of money gushing into the three biggest indexers” (Vanguard, BlackRock and State Street), and were often explained by fear-based arguments such as indexing was Marxist or Socialist or even dangerous to the… Read More

Ritholtz Ranks What Helps or Hurts Investment Returns

In a recent Bloomberg article, columnist Barry Ritholtz ranks those factors that he believes drive investment portfolio returns. “An unexpected challenge in performing this exercise,” writes Ritholtz, is a tendency for some elements to offset others.” Ritholtz identifies eight “broad elements that typically determine the total return of any portfolio,” in descending order of importance (i.e. factors later in the list could potentially offset those listed earlier): Security selection: “No doubt,” writes Ritholtz, “better stock… Read More

Every Investor Should Read These O’Shaughnessy Tweets

In a recent Bloomberg article, columnist Barry Ritholtz references a provocative tweetstorm by famed investor James O’Shaughnessy regarding “investor ignorance.” “The post, as regular readers know,” writes Ritholtz, “was about one of my favorite subjects. To be more precise, it was about our own lack of understand of our own lack of understanding.” O’Shaughnessy’s message centers on how important it is for investors to understand what they don’t know, starting with how the market will… Read More