Greenblatt's Little Book That Beats The Market Message Board

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Strategies & Market Trends : Greenblatt's Little Book That Beats The Market

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To: Shane M who wrote (94)	2/25/2006 2:42:02 PM
From: Shane M	Read Replies (2) of 218

All, I also wanted to post something regarding the ranking method. Adding different companies to your screens can easily change the relative rankings of the companies. Example: Take the 3 companies below - lets say all havea market cap over $2Billion. rank rank stock ROC Yield ROC Yield sum A 35 8 2 3 5 B 30 12 3 1 4 C 40 9 1 2 3 The best ranking stock of that group is company C. with the best ROC rank and the second best yield. Now lets say we expand our mkt cap to include more companies with lower mkt caps. We add companies D and E with mkt caps below $2Billion. rank rank stock ROC Yield ROC Yield sum A 35 8 3 5 8 B 30 12 4 1 5 C 40 9 2 4 6 D 45 10 1 3 4 E 20 11 5 2 7 In this group new company D ranks the best, but note that in this list company B now ranks better than company C. You all have probably already noticed this, but wanted to point out that the ranks can change as the pool of companies changes and might also be behind some of the difficulty in tying to Grennblatt's stocklist. It matters whether you rank the companies first and then restrict based on mktcap; or vice versa. Shane

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