“It just seems logical that sticking to investing in only a small number of companies that you understand well, rather than moving down the list to your thirtieth or fiftieth favorite pick, would create a much greater potential to earn above-average investment returns.” WellsSeemsMovingNumbersCompanyGreaterReturnPicksInvestmentInvestingAverageListsLogicalSmall NumbersAbove Average Book:The Big Secret for the Small Investor: A New Route to Long-Term Investment Success Source: The Big Secret for the Small Investor: A New Route to Long-Term Investment Success
“Value investing strategies have worked for years and everyone's known about them. They continue to work because it's hard for people to do, for two main reasons. First, the companies that show up on the screens can be scary and not doing so well, so people find them difficult to buy. Second, there can be one-, two- or three-year periods when a strategy like this doesn't work. Most people aren't capable of sticking it out through that.” PeopleYearsFirstsWellsTwoHardReasonShowsValuesThreeDifficultCompanyKnownPeriodsCapableStrategyInvestingScaryScreensThree YearsSticking It Author:Joel Greenblatt
“The big picture is: the main thing you should be concerned about in the future are incremental returns on capital going forward. As it turns out, past history of a good return on capital is a good proxy for this but obviously not foolproof. I think this is an area where thoughtful analysis can add value to any simple ranking/screening strategy such as the magic formula. When doing in depth analysis of companies, I care very much about long term earnings power, not necessarily so much about the volatility of that earnings power but about my certainty of "normal" earnings power over time.” ThinkingShouldLongBigsCarePastValuesTurnsTermSimpleCompanyMagicReturnNormalAreasConcernedStrategyAddDepthCertaintyAnalysisLong TermThoughtfulFormulasI CareEarningBig PictureScreeningRankingProxyVolatilityFoolproof Author:Joel Greenblatt
“My goal is to buy a company at a low multiple to normal earnings power several years out and that the company earns good returns on capital at that level of normal earnings. A holding period of more than one year also works quite well as the factors are persistent in years 2 and 3.” YearsWellsGoalLevelsCompanyReturnPeriodsNormalLowsFactorsMultipleEarningPersistent Author:Joel Greenblatt
“The more confidence I have in each one of my stock picks, the fewer companies I need to own in my portfolio to feel comfortable.” NeedsFeelsCompanyComfortablePicksFewerPortfolios Book:The Little Book That Still Beats the Market Source: The Little Book That Still Beats the Market
