Ever since its release, much has been written whether or not Joel Greenblatt’s “Magic Formula” works. Joel Greenblatt has consistently said that results should be measured over time and every once in a while there would be stretches where the magic formula does not work.
So far the results have been bad. Just about every blog/site testing the magic formula has underperformed the market" Continue Reading
I happen to agree with his overall assessment that we need a longer time frame in which to judge the validity of Greenblatt's formula. That said I am not under performing the market (unless you use a beta adjusted returns).
Anyway check out his site and enjoy your weekend! For more investing related article click here.
2 comments:
hey,
thanks for the good word, keep up the good work and congrats on outperforming the market. As David Dreman says:
"They say noone beats the market, except for those us who do"
My biggest concern about Greenblatt's study is the short time period it covered (1988-present). I want to know how it would have performed going much further back. The performance during the 1960s and 1970s could be relevant to today's market, also the 1930s. Greenblatt's study only tested it during the great bull market.
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