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… Read More

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… Read More

Greenblatt’s Magic + 5 Value Stocks that Make the Cut

Hedge fund manager Joel Greenblatt, author of The Little Book that Beats the Market, uses what he calls a “magic formula” to earn returns that outperform the market. In a recent article for TheStreet.com, John Reese, CEO of Validea, explains Greenblatt’s strategy of focusing on return-on-capital and earnings yield to find “good companies at bargain prices.” But this straightforward, seemingly simple strategy is no magic bullet. It is based on a long-term view (3 to… Read More

There’s Magic in Greenblatt’s “Magic Formula”

I’ve added a new investment model to my arsenal. It’s based on the “Magic Formula” strategy that Joel Greenblatt outlined in The Little Book that Beats The Market. Some of what you’ll find below is a recap of a post I did last week, but in this post I’ve also included the ten stocks that are currently in my Greenblatt-based portfolio. The beauty, and attractiveness, of Greenblatt’s “Magic Formula” lays in its perceived simplicity. The… Read More