Joel Greenblatt Gönderileri
Joel Greenblatt kitaplarını, Joel Greenblatt sözleri ve alıntılarını, Joel Greenblatt yazarlarını, Joel Greenblatt yorumları ve incelemelerini 1000Kitap'ta bulabilirsiniz.
Option 1: MagicFormulaInvesting.com
Step 1
Go to magicformulainvesting.com.
Step 2
Follow the instructions for choosing company size (e.g., companies with market capitalizations over $50 million, or over $200 million, or over $1 billion, etc.). For most individuals, companies with market capitalizations above $50 million or $100 million should be of sufficient size.
Step 3
Follow the instructions to obtain a list of top-ranked magic formula companies.
Step 4
Buy five to seven top-ranked companies. To start, invest only 20 to 33 percent of the money you intend to invest during the first year (for smaller amounts of capital, lower priced Web brokers such as foliofn.com, buyandhold.com, and scottrade.com may be a good place to start).
Step 5
Repeat Step 4 every two to three months until you have invested all of the money you have chosen to allocate to your magic formula portfolio. After 9 or 10 months, this should result in a portfolio of 20 to 30 stocks (e.g., seven stocks every three months, five or six stocks every two months).
Step 6
Sell each stock after holding it for one year. For taxable accounts, sell winners after holding them a few days more than one year and sell losers after holding them a few days less than one year (as previously described). Use the proceeds from any sale and any additional investment money to replace the sold companies with an equal number of new magic formula selections (Step 4).
Step 7
Continue this process for many years. Remember, you must be committed to continuing this process for a minimum of three to five years, regardless of results. Otherwise, you will most likely quit before the magic formula has a chance to work!
Step 8
Feel free to write and thank me.
Step by Step Guide
• Use Return on Assets (ROA) as a screening criterion. Set the minimum ROA at 25%. (This will take the place of return on capital from the magic formula study.)
• From the resulting group of high ROA stocks, screen for those stocks with the lowest Price/Earning (P/E) ratios. (This will take the place of earnings yield from the magic formula study.)
• Eliminate all utilities and financial stocks (i.e., mutual funds, banks and insurance companies) from the list.
• Eliminate all foreign companies from the list. In most cases, these will have the suffix “ADR” (for “American Depository Receipt”) after the name of the stock.
• If a stock has a very low P/E ratio, say 5 or less, that may indicate that the previous year or the data being used are unusual in some way. You may want to eliminate these stocks from your list. You may also want to eliminate any company that has announced earnings in the last week. (This should help minimize the incidence of incorrect or untimely data.)
• After obtaining your list, follow steps 4 and 8 from the magicformulainvesting.com instruction page.
Sayfa 160Kitabı okudu
Choosing individual stocks without any idea of what you’re looking for is like running through a dynamite factory with a burning match. You may live, but you’re still an idiot.
1. Most people and businesses can’t find investments that will earn very high rates of return. A company that can earn a high return on capital is therefore very special.
2. Companies that earn a high return on capital may also have the opportunity to invest some or all of their profits at a high rate of return. This opportunity is very valuable. It can contribute to a high rate of earnings growth.
3. Companies that achieve a high return on capital are likely to have a special advantage of some kind. That special advantage keeps competitors from destroying the ability to earn above- average profits.
4. By eliminating companies that earn ordinary or poor returns on capital, the magic formula starts with a group of companies that have a high return on capital. It then tries to buy these above-average companies at below-average prices.
5. Since the magic formula makes overwhelming sense, we should be able to stick with it during good times and bad.
Sayfa 111Kitabı okudu
And what does the magic formula do with this group of good companies? It tries to buy them at bargain prices! The formula chooses only good companies that also have a high earnings yield. A high earnings yield means that the formula will buy only those companies that earn a lot compared to the price we are paying. Hmmm... buying above-average companies at below average prices, it sounds like it should work!
Sayfa 110Kitabı okudu
By eliminating companies that earn ordinary or poor returns on capital, the magic formula starts with a group of companies that have a high return on capital.
In short, companies that achieve a high return on capital are likely to have a special advantage of some kind. That special advantage keeps competitors from destroying the ability to earn above-average profits.
In other words, owning a business that has the opportunity to invest some or all of its profits at a very high rate of return can contribute to a very high rate of earnings growth!
The magic formula chooses companies through a ranking system. Those companies that have both a high return on capital and a high earnings yield are the ones that the formula ranks as best. Put more simply, the formula is systematically helping us find above-average companies that we can buy at below-average prices.
Sayfa 103Kitabı okudu