so Joel Greenblatt is a stand out which got me reading his earlier work. The most powerful thing I learned which I actually inherently knew is the power of combining options with fundamental investing.
only option worth your while is slightly otm atm call option with an expiration for as long as possible. The stock is something that has fallen significantly while market is in a bear market. You stand to lose -100 percent if you are wrong, or you will make a ridiculous gain in the vicinity or +400 percent.
anyways nice to hear confirmation of what I thought intuitively from a market heavy weight! I plan to drop 5 percent of net worth per bet and up to 30 percent of net worth in options. All in my trad and Roth accounts.
Lol it’s so funny, when I was in college and I did this shit, I was a pro in structuring like I knew how they all looked but had no idea how to pick stocks. Anyways lol I haven’t looked at options in a good minute so it’s time to brush up on it and track the premiums for the stocks I like. I finally have a watchlist of stocks i like though. Spent 2 years building and tracking it. All large caps, all scalable, and pretty sure all got most liquid options!
his newer returns are based on a new strategy that is based on value investing. It’s more factor based. His earlier work involved special situations, spin offs, restructuring. Etc etc. and using options to lever on his ideas
“When Greenblatt published his book in 2005, he reported that the magic formula investing had delivered an average annual return of 30.8% over 17 years and that it beat the S&P 500 96% of the time.”
“Black box investing” and “magic formulas” are like standing at a baseball game. It works…until everybody else starts doing it. Then you’re screwed.
I don’t recall his new strategies, but I heard him interviewed recently while I was in China. My impression of his investment style was that was very cool and sounded like it could work. But I can’t remember anything besides its a factor/quant type setup
Yep his earlier portfolio was more concentrated. That magic formula is his new way to invest and it might actually be underperforming the s&p 500 cuz it’s value based and value has underperformed.
haha I knew it was fifty cent it just reminded me of Chris brown. The lyric
