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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Madharry who wrote (35864)	11/8/2009 12:06:15 PM
From: Spekulatius	Respond to of 78764

My commission are way down since I moved my account to Interactive Brokers and Wells Fargo (100 free trades). They are certainly below 1% of my asset value/year. The managed account plan (mostly more than 1%) is something I looked at a couple of years ago. One problem with those fixed fee accounts is that they tend to give you poor prices when thy buy and sell (at least that is a complaint I heard) so it seems that they find a way to get extra money in their pockets via friction losses.

To: Madharry who wrote (35864)	11/8/2009 3:35:11 PM
From: Paul Senior	Read Replies (2) \| Respond to of 78764

In my largest brokerage account, I'm running a little over 1/2 of 1 percent of assets. And I'm okay with that. If the Greenblatt model is to buy about 20 stocks that meet criteria and hold them for one year (and then sell), that'd be about 40 commissions per year for an individual follower. At say $8 per, that's $320 commission cost per year. With $25K invested, it's only $1250 per stock though. Still, the idea is supposed to work out okay over time, so the diversity might just act to smooth things out. If somebody followed what Greenblatt seems to be doing himself --go very concentrated-- and which he suggested (?) for his kids or someone just starting out (again, go for a few stocks), then the person would maybe spend a little time to whittle down the possible buys to maybe 8-10 positions (every year). In which case, maybe 20 $8 commissions. $160 vs $250, but you use your judgment and time to select the stocks. I say for $25K, it might be okay. For $100K, for me, I'd not want to give up 1% per year. ==== Markets up this year, so I'm guessing Greenblatt model doing very well. Seems though that since publication of book or the past 2-3 years, model has not performed as historical results. I believe Mr. Greenblatt has said there've been times when model doesn't work for 2-3 year period. So current performance results don't invalidate his model or his enthusiasm for it. IF somebody is really confident that the model works and garners 20% returns on an annual average, then if the alternative to going with the Greenblatt promoters (paying the 1% fee) is to buy bonds or etfs or mm funds or pfd stocks, then maybe just go for it and forget about the "measly" 1% charge: Focus on the 19% average gains to be expected which could/should/might exceed those alternative choices. For me, while I believe in the model, I have trouble coming to believe on a 20% avg. annual return.

To: Madharry who wrote (35864)	11/9/2009 2:03:08 AM
From: Paul Senior	Read Replies (1) \| Respond to of 78764

Greenblatt portfolio fund. On balance, I'd say it could be worth a shot for part of a portfolio. On the one hand, why pay someone for something that seemingly, you can do yourself? That would be so if we knew exactly what the formula was. We know it's 1/pe vs. roic, but the definition of roic is not specified by the author (or wasn't when the book came out). Still, imo, pe vs. roe is just as good. The benefit with these guys is that they do the work - picking and holding and selling, and that they follow some approach that is understandable and consistent (assuming they pick stocks from the quadrant of high roic and high 1/pe). Yes they'll use judgment to select from among low cap/high cap, domestic/foreign, etc., but it should all be encased within the quadrant (the criteria). To me, this beats most mutual fund managers and people here who claim to be value investors but you can not understand how they determine that a stock is undervalued. As for example with mutual fund managers who say they have quant skills in a black box; just trust them. Or fund managers who ask you to invest with them because the value they provide is meeting with and evaluating the companies' corporate managers (access to whom, individual investors don't get).

To: Madharry who wrote (35864)	11/9/2009 8:19:00 AM
From: RumbleFish	1 Recommendation Read Replies (3) \| Respond to of 78764

If you register with the magic formula site you can use a stock screener that lists their top-rated stocks with the only criteria you choose being minimum market cap. Is there any difference between this and what they would choose for you in a managed account? For example, I just ran their screener using 500 mil as minimum market cap and got this result: magicformulainvesting.com Aeropostale Inc. ARO 2,263.76 11/06 07/31 Amedisys Inc AMED 1,115.76 11/06 09/30 Apollo Group Inc APOL 8,663.67 11/06 08/31 Buckle Inc. (The) BKE 1,365.17 11/06 07/31 CSG Systems International Inc. CSGS 583.23 11/06 09/30 Chart Industries Inc GTLS 537.08 11/06 09/30 Chemed Corp CHE 1,015.87 11/06 09/30 Chicago Bridge & Iron Co. NV CBI 1,910.64 11/06 09/30 Corporate Executive Board Company (The) EXBD 818.41 11/06 09/30 Cubist Pharmaceuticals Inc CBST 1,019.27 11/06 09/30 Deluxe Corp DLX 748.60 11/06 09/30 Dresser-Rand Group Inc DRC 2,532.51 11/06 09/30 EMCOR Group Inc. EME 1,624.98 11/06 09/30 Fluor Corp. FLR 8,165.42 11/06 06/30 Foster Wheeler AG FWLT 3,952.42 11/06 09/30 GT Solar International Inc SOLR 750.99 11/06 06/30 Garmin Ltd GRMN 5,696.32 11/06 09/30 ITT Educational Services Inc ESI 3,481.70 11/06 09/30 Interval Leisure Group Inc IILG 654.54 11/06 06/30 Jacobs Engineering Group Inc. JEC 5,428.23 11/06 06/30 KBR Inc KBR 3,252.63 11/06 09/30 Lorillard Inc LO 12,501.65 11/06 09/30 Net 1 Ueps Technologies Inc UEPS 1,054.69 11/06 06/30 NeuStar Inc NSR 1,759.43 11/06 09/30 Raytheon Co. RTN 18,219.31 11/06 09/30 Tessera Technologies Inc TSRA 1,089.70 11/06 09/30 Tutor Perini Corp TPC 847.84 11/06 09/30 Vector Group Ltd VGR 1,021.95 11/06 06/30 Weight Watchers International Inc. WTW 2,072.18 11/06 06/30 j2 Global Communications Inc JCOM 964.77 11/06 09/30 Sorry about the formatting.