Magic Formula: Major Insight?
Read the full article at: http://justadrone.blogspot.com/2007/01/major-insight.html
Submitted by Nick on Thu, 2007-01-25 11:08.
(via justadrone.blogspot.com)
Commentary on buying or selling Magic Formula Stocks on 20% drops in stock price.
What about only purchasing
What about only purchasing from the screen at their 52wk lows?
I think that might be a great idea
I think that might be a great idea too, but how do you suggest we test that? A poor performing stock could hit a new low daily- when would the buyer pull the trigger? Are you suggesting that if it is on the screen and at at 52 week low that it should be selected?
It wouldn't be a very
It wouldn't be a very "scientific" test, but it should be a decent indicator.
Mr. Greenblatts screen identifies very well managed companies, so it should be a "no-brainer" to purchase those companies when they are selling at their own historical lows. In my opinion, the best matrix to gauge a company is against itself.
After all, you could buy the best managed company in the world, but it is still a terrible investment if it is purchased at too high of price.
Agreed, how and when would
Agreed, how and when would you implement it?