Value Investing News - Reviews - Comments

Re: The Little Book That Builds Wealth

George — Tue, 25 Mar 2008 07:45:47 -0400

I'm not sure Alex. However, I did just get a copy of this book in the mail yesterday. I'm pretty excited to start reading it soon.

thanks for the link George

alexg — Sat, 22 Mar 2008 13:16:52 -0400

isnt this in a way a condensed version of "the 5 Rules for successful investing?
http://www.contrarianvalueinvesting.com/

The Four Filters

George — Wed, 12 Mar 2008 23:19:08 -0400

Bud's looking for some feedback on his book. Please share your thoughts, so he can try to address your comments.

Book

bsdwork — Tue, 04 Dec 2007 14:07:56 -0500

To be honest, I haven't read the book. But this magic formula sounds interesting..maybe I will give it a look when I'll have a little time.. I'm dealing in this moment with an Arizona employee handbook, so, I'll let you know my opinion too.

Best regards,

Daniel

Self promotion

vitaliy — Fri, 26 Oct 2007 15:06:02 -0400

Dear Nick, you are right I am not a good self promoter. Also, it is very hard to really go in depth about the book in three minutes. I probably did sound like an academic (though I am not one!) because I was explaining why range-bound markets happen. Talking with my hands did not help that perception either J

I was recently interviewed by my favorite (Motley) fools Bill Mann and Philip Durell; I hope it will give you a more in depth look into the book.

In addition, George just sent me very insightful questions about the book that I fully intend to answer.

I spent couple days in NYC and found that for some reason Borders placed an order for my book awhile back but still has not received a single copy. However, every Barnes & Noble in NYC with exception of one had it. Amazon is a way to buy the book anyway, it 34% cheaper there.

I hope this excerpt
will provide some a better idea of what the book is about.

Vitaliy's not much of self

Nick — Thu, 25 Oct 2007 11:38:32 -0400

Vitaliy's not much of a self promoter in this interview. His interests would be better served if he explicitly stated how investors would benefit from his methodology rather than loosely implying a benefit. The title itself already has the potential to turn off value investors, his target market, just like many of us avoided "Trade Like Warren Buffett" for sometime. This interview does nothing to overcome that bias or generate a real interest for a potential reader. He seemed like more of an academic than a passionate investor. Of course this observation may speak more the the skill of the interviewer rather than the interviewee.

Thankfully, there are dozens of fantastic reviews online; however, I've yet to see "Active Value Investing" in any bookstores here. And after being evacuated I've spent TONS of time in bookstores. I look forward to reading his book and sincerely hope that it is a success.

DeepValue: Be sure to vote

Nick — Thu, 18 Oct 2007 20:16:51 -0400

DeepValue:

Be sure to vote up your own submissions (like this one). It helps them make it to the "Top Stories" page and updates the RSS Feed which might bring us more visitors. More visitors = more content!!

Thank you

deepvalue — Thu, 18 Oct 2007 11:40:26 -0400

Glad that many enjoyed the piece

George, I couldn't agree

Nick — Wed, 17 Oct 2007 22:52:22 -0400

George,

I couldn't agree more. Did you explore some of the links at the end of the article? I didn't spend any time digging in but there are some great places to start some merger research.

This is a solid article on

George — Wed, 17 Oct 2007 21:20:14 -0400

This is a solid article on merger arbitrage. I think the author underestimates how hard it is to find opportunities where the risk exceeds the reward. Hedge funds work this area really hard.

I understand Berkshire being

Mark Perkins — Wed, 12 Sep 2007 22:24:28 -0400

I understand Berkshire being #1 but not really the others

Re: have you tried Tradermatch ?

George — Fri, 27 Apr 2007 14:12:52 -0400

I haven't tried tradermatch.com yet. It looks like Fool Caps but more oriented towards traders. I'll have to add this one and some of the other sites mentioned to my Stock Investing 2.0 list.

have you tried Tradermatch ?

nouveautrader — Fri, 27 Apr 2007 12:04:46 -0400

tradermatch.com , is a bit like wikinantial with advanced statistics and trade history analysis.

MFI yahoo group

George — Thu, 29 Mar 2007 07:51:38 -0400

I'm a member of that group, so I'll have to go and check out what was done when I get a free moment.

Magic Formula

wax — Thu, 29 Mar 2007 07:05:50 -0400

I read the book. I was not really impressed.

Buy the stocks with the highest ROIC (100%) and hold them for one year, then sell them. This process is repeated year after year.

I never understood why Mr. Greenblatt was trying to sell me a book when he has THE formula that should be making him wealthy beyond description?

I also didn't quite grasp the need to sell after one year. According to Mr. Greenblatt, one year was chosen because the ROIC formula works with trailing twelve month tax returns.

What I didn't get was, why sell first and then reassess, since, according to Mr. Greenblatt, it takes 3-5 years for the "formula" to work. Why not hold the stock, reassess, and go from there?

I've always wondered if a person bought a stock, not a stock of the day but just a stock, and paid no attention to the stock's price or value, if the price of that stock would go up any significant degree over a 3-5 year period? I have a feeling it probably would.

Wow! Could that be a new investing strategy? Just pick a stock, any stock other than one constantly in the news, then buy that stock and hold it for 3-5 years, five years being preferable to three.

After three to five years, sell half and hold those shares for 3-5 years, and then sell half again. And so forth and so on until all the shares are gone.

I wonder what the return would be with that strategy over the course of an investing lifetime?

Just think, if a person were to actually use such a strategy and couple it with using a margin of safety for the stock purchase they might just do okay...over the longer term that is. Hmmmmm.

As to reproducing the Magic Formula? While it's nothing more than a screen, it is different than the MSN screen you mentioned.

Money Central, the MSN screen, uses Return on Capital while the Magic Formula screen uses Return on Invested Capital.

Simply stated, Return of Capital means I put my capital (assets) to work, and that work increased or decreased the value of that capital by xx%.

Return on Invested Capital means I have some capital to put to work but before I do, I want to be able to assess the POTENTIAL return that capital will generate.

At the end of the day, I personally believe the only Magic Formula that will consistently provide an investor with returns that far outweigh the risk taken, is buying with a margin of safety. Something I don't see Mr. Greenblatt's formula doing.

Wax