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buffett
11-09-2005, 12:48 PM
www.magicformulainvesting.com (http://www.magicformulainvesting.com)
DesertCat
11-09-2005, 01:31 PM
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www.magicformulainvesting.com (http://www.magicformulainvesting.com)

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Greenblatt's great. I highly recommend his first book. Looks like his results are down however, his first ten years were 50% annualized, now he's at 40% over 20 years, which I guess is inevitable with a larger fund.
LearnedfromTV
11-09-2005, 03:31 PM
Good article about him in the Journal today.
DesertCat
11-09-2005, 03:44 PM
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www.magicformulainvesting.com (http://www.magicformulainvesting.com)

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Hmm, I'm working through some of the recommendations from this "magic formula", and so far I'm not impressed (though I don't believe in "formulas" so I admit I'm biased, and since I haven't read the book I don't know it's methodology). The first two.

CALL I've looked at before. It's very cheap but is in the middle of major product transition from a dying platform (dialup) to a new one (wireless services). It's high risk.

BPTR (BrandPartners) has strong earnings, but a very weak balance sheet, and has been doing some dilutive fund raising to keep their heads above water. It's also very promotional, so I think it's high risk as well.

I'm still very interested in reading the new book, but doubt I'll buy into his "formula".
DesertCat
11-09-2005, 04:34 PM
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Good article about him in the Journal today.

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WSJ Article (http://online.wsj.com/article/SB113149105486391586.html?mod=home_whats_news_us). Thanks, it's very good. I have a subscription but I'm told the WSJ online is free this week...
buffett
11-09-2005, 04:58 PM
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It's high risk.....it's high risk as well.

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Exactly. Like the article says, "There are some limitations to the approach. It seems prone to tossing up stocks whose high returns and growth may be in the past. Magic-formula stocks with more than $1 billion in stock-market value include lots of fast-growing specialty retailers and niche pharmaceutical companies. Some of these will flame out.

That's why Mr. Greenblatt argues that novice investors buy at least 20 or 30 of them. For himself, he buys a smaller number that he can know deeply. But that requires something not easily taught in a book: good instincts and judgment to distinguish true cheap gems from one-hit wonders."

On the spectrum of n00b<------>Warren Buffett, I would put Greenblatt very far to the right and DesertCat much closer to Greenblatt than n00b.