The Magic Formula?

[Peter Hansen]

I have just finished reading a book called "The Little Book That Beats The Market" (But NOT Mr Market) by Joel Greenblatt. The Basic criteria for stock selection are 2 . Number one is Return on Capital (EBIT/net Working Capital + Net Fixed assets. Number two is Earnings Yield (EBIT/Enterprize value) Simple formula but highly effective. If you follow his formula for a three year period......there has never been a loss. To simplify matters the formula is free and is at his website www.magicformulainvesting.com
A simple 2 step process automatically generates a list of from 25 -100 stocks. Needless to say it is an interesting concept!

[billyjoe]

Peter,
It really is interesting. What does the book offer that isn't available on the site? My wife ordered me one for Christmas. Do you have any other info. on Joel Greenblatt? Thanks

billyjoe

[skiracer]

Pete,
Interesting. Always nice to have another place to look at a number of stocks for leads and setups.

[Peter Hansen]

Peter,
It really is interesting. What does the book offer that isn't available on the site? My wife ordered me one for Christmas. Do you have any other info. on Joel Greenblatt? Thanks

billyjoe

Billy,
Joel GreenBlatt is the Founder and managing partner of Gotham Capital , an investment partnership that has had 40% annualized returns since 1985. He is an adjunct professor at Columbia Business School. He also hold BA and MS from the Wharton school. He is also cofounder of www.valueinvestorsclub.com

The book is an easy read and very oversimplified in the beginning , but it does explain completly his rationale for using the Magic Formula!