There are a number of ways value investors hunt for stocks. Among the techniques is the Magic Formula, a strategy first detailed by Joel Greenblatt in his book, The Little Book that Still Beats the Market.This book was a New York Times bestseller and the book’s web site indicates over 300,000 copies are in print. The book completely explains a formula that screens for value investments. The author maintains a free web site that offers access to lists of stocks meeting the criteria of the Magic Formula right now.Before addressing the formula, let’s look at the question of ...
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VIX is low. Market analysts have been telling us that for months. And, many of the analysts are telling us that the fact that VIX is low means we should be worried. They believe a low VIX reading is a sign of complacency among investors.Complacency is considered to be bad. Under this interpretation, complacency indicates investors are not paying enough attention to risk. They might become too aggressive when they forget about risk. Or, the market may simply fall when investors are least expecting.This has become a popular theme among market analysts. One Bloomberg pundit has summed up the problem ...
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Peter Lynch is one of the most successful investment managers of all time. But, he retired many years ago and many new investors are unfamiliar with him. That is unfortunate since there is much to learn from studying Lynch’s record.Lynch’s record is among the most remarkable in market history. He managed the Fidelity Magellan Fund, and grew it into the largest mutual fund in the world by the time he retired. From 1977 until his retirement in 1990, Lynch delivered average annual gains of 29.2% to investors in his fund.Lynch’s gains were more than double the average annual return for ...
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In a recent blog post, we highlighted the potential benefits of using short term trading strategies. One advantage of trading frequently can be the fact that it allows a trader to rapidly compound gains. Through that process, wealth can accumulate quicker.Our post drew a variety of responses. Some readers asked for specific examples of short term trading strategies. There are many resources available on this topic. But, most of the best strategies will require a great deal of effort or software that may be expensive.Some of the most popular strategies among short term traders include those developed by Larry Connors ...
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Warren Buffett is always on the hunt for potential acquisitions. His investment vehicle, Berkshire Hathaway, ended the latest quarter with nearly $100 billion in cash and equivalents on the books. This gives Buffett a lot of investment capital for potential deals.We know Buffett is looking for deals. Berkshire was part of the team that put together the failed $142 billion Kraft-Unilever attempt earlier this year. More recently, Berkshire Hathaway Energy, a subsidiary of Berkshire Hathaway, announced a definitive merger agreement with Energy Future Holdings Corp. which will ultimately result in the acquisition of Oncor, an energy delivery company ...
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If you’re a small investor, you may have learned that many financial advisers don’t want your money. It’s common in the business to see minimum account sizes that are well beyond the means of small investors. While there are advisers with account minimums of $1 million or more, some investors are starting with less than $25,000.It might be frustrating to find that many financial professionals want nothing to do with small investors. But, sometimes advisers give meaningless advice, even to investors that meet their account minimums.Many advisers will spend a great deal of time talking about the long run. They ...
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Buy the dips. That’s a popular investment strategy. It is a popular strategy because it works. But, like almost every investment strategy, it only works sometimes. Buying the dips is only an effective strategy when the dip is actually just a dip within an up trend and not the beginning of a new bear market.So, like with all investment strategies, it can be useful to define rules so that we know when to buy and when to avoid buying. For this strategy, we will need to identify rules that define the idea of a dip and an up trend.Let’s start ...
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Charts can be useful for all investors. Whether you are a technical analyst or a skeptic of technical analysts, charts can be useful because they offer a visual representation of the recent market action. Reviewing charts can simply offer an insight into market action.To do this, it is important to use simple charts. Some chartists add a dizzying array of indicators to charts. More often than not, this creates confusion and conflicting signals. To avoid this, just one or two indicators should be added to a chart. When two are used, they should measure different factors.In the charts below, we ...
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