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Strategies & Market Trends : Greenblatt's Little Book That Beats The Market
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To: JimLudlow who wrote (12)12/17/2005 3:27:52 PM
From: Paul Senior  Read Replies (1) of 218
 
Article seems like academic gibberish to me. And it doesn't seem like circular or wrong reasoning to me to back test using prices at the time of the back test. The results are based on baskets of stocks, so the results Greenblatt promulgates are based on averages - there ought to be a clinker or two at least in any basket of stocks one chooses - and good stocks left out of the basket. So to say here's a coded example of a stock with a high price/book value and it is undervalued (intrinsically or otherwise), and imply that the screen is an inferior or incorrect methodology because it would've not picked up that particular stock - well that imo, does not invalidate the benefit or value of employing the screen. It's the good average performance of the basket of stocks that we're after.

To pretty much say somebody's math or finance assumptions or methods are wrong&flawed - possibly because they don't have a PhD to know better (how arrogant!), and regardless if they've made millions with their (flawed) methods... - well, pleeez! Let me be that wrong and give me the $millions I could get from using those flawed assumptions/methods.

Perhaps the best method is as practiced by Greenblatt - neither either/or, but rather both: screen AND contemplation of the individual stock/company.

For me personally though, my preference is screening alone.

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aside: Ran the screen for top 100 and $1000M market cap. I count that I have positions of various sizes in 22 stocks on that screen. (Most were not purchased this year though.)
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