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Greenblatt on Wealthtrack!!!


innerscorecard
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Thanks for posting!  I'll have to check it out once I'm at a proper computer.

 

I've got a *lot* of respect for the guy, but (just guessing) does he spend a lot of time promoting his new-ish funds?

 

The recent New York Times article certainly took that angle all but explicitly.

 

Greenblatt is certainly on TV a lot these days, but that's not the same as blatantly being promotional. I certainly don't think there's anything untoward about what Greenblatt is doing, and I think the firm's materials have sufficiently explained things. I think if you are willing to read between the lines, Greenblatt's approaches all make sense for different people:

 

1. You Can Be a Stock Market Genius-style investing is ideal for those who understand the value investing approach and have the inclination and ability to actually do financial analysis (this eliminates the vast majority of individual investors). Returns and volatility will both be extremely high.

 

2. Magic Formula investing is ideal for those who understand enough to understand what value investing is and why it works, but do not themselves have the inclination and ability to actually do financial analysis, but DO have the ability to handle volatility and control their emotions and follow a system at least somewhat (from Greenblatt's later experiences with how ordinary people handled the Magic Formula - trying to time the market, and making the formula worse through cherry-picking, this eliminates far more individual investors than he first thought);

 

3. Formula Funds/Gotham Funds - for people who understand why value investing works, but can't handle volatility. The big question for me is whether, AFTER fees, Gotham Funds' returns should be lower than, about equal to, or higher than Magic Formula returns. I really don't know the answer to this question, as I think the answer depends on how actually superior Gotham's proprietary data adjustments are (which isn't shared with the Magic Formula official site).

 

Out of curiosity, I did make an inquiry to Gotham Funds about whether they'd waive the minimum, after explaining my investing background, philosophy, and needs, and they were wiling to waive it for me. I haven't actually made an investment yet. I may or may not, as the fee really is very high, and that goes against the "cost matter hypothesis" which is very important to me. But if I had a job that restricted my personal account trades, Gotham Funds' would definitely have a place in my portfolio.

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Out of curiosity, I did make an inquiry to Gotham Funds about whether they'd waive the minimum, after explaining my investing background, philosophy, and needs, and they were wiling to waive it for me. I haven't actually made an investment yet. I may or may not, as the fee really is very high, and that goes against the "cost matter hypothesis" which is very important to me. But if I had a job that restricted my personal account trades, Gotham Funds' would definitely have a place in my portfolio.

 

 

Hi innerscorecard - did they say how low of an investment they would be willing to accept?

 

Thanks,

Lance

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I don't believe he just 'appears' promotion, he is.  I was talking with a friend of mine who is a broker.  He said that Greenblatt has set up weekly calls with brokers at warehouses and smaller firms to explain his funds.  He also makes himself available to brokers to call and talk about his funds.

 

My impression has been that he realized long ago that he was the brand.  And that analysts can run the strategy, but people are buying his image.  So he's on TV and in print promoting the funds wherever he can.  I wouldn't be surprised if that's most of what he does now.

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Bummer.  It doesn't look like I can watch it without subscribing to their premium service.  They seem to have a lot of old stuff for free.  I wonder if it goes "non-premium" if you give it a few months.

 

If you are a premium member,  you can hear it on Weds, if not, Saturday morning.

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I don't believe he just 'appears' promotion, he is.  I was talking with a friend of mine who is a broker.  He said that Greenblatt has set up weekly calls with brokers at warehouses and smaller firms to explain his funds.  He also makes himself available to brokers to call and talk about his funds.

 

My impression has been that he realized long ago that he was the brand.  And that analysts can run the strategy, but people are buying his image.  So he's on TV and in print promoting the funds wherever he can.  I wouldn't be surprised if that's most of what he does now.

 

I would like to be able to see what he says in these meetings. In his TV and newspaper appearances so far (not including WealthTrack), he didn't say anything different or more promotional in style than what he said in his books, really. The New York Times article implied that he was outright promising superior performance. But that was a few quotes without context. That's why I'm very curious to hear the tone he takes on Wealthtrack this time around.

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Guest wellmont

I think greenblatt realized that asset management business is one of the great business models of all time. I don't think his business is a based on a cult of personality. not the way he has it structured. he is using quantitative models to invest. He has great quantitative data, perhaps the best set of valuation data out there. this is the asset of his company. he's a great spokesperson yes. but I don't believe investor goes in thinking that greenblatt is making buy sell decisions the way he did with his old fund. they own and short hundreds of stocks in each portfolio based on what the model tells them. that being said the fees are going to act as an anchor on performance.

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My thoughts/liveblog from the video as well as the Web Extra:

 

- "My best students": H. Kevin Byun?

 

- Greenblatt seemed to really emphasize price over quality in what he's doing now. That seems to support what Tobias Carlisle has been saying about quality perhaps being a metric too much.

 

- He acknowledged the failure of The Big Secret for the Small Investor.

 

- When Mack led with "Does it bother you that..." I thought she was going to ask about the 2.25% fee, or the closing of the Formula Capital funds! Wish she had asked one of those questions, although not realistic to expect that.

 

- Greenblatt emphasized the tax benefit of the ETF structure. Previously in another interview (I forgot which), he had said he had no plans to launch an ETF himself due to the need for daily disclosure. I wonder if the new ETF structure that the SEC approved recently that allows or ETFs without daily disclosure will prompt him to consider launching an ETF version of the Gotham funds.

 

- He seems to be de-emphasizing the Magic Formula these days, never really mentioning it by name, and saying that what Gotham is doing now is a more developed version of that crude draft. And despite him bringing up VIC, he never mentioned the Magic Formula Investing website.

 

All in all, it was ok, but less good than some past interviews he has given.

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- Greenblatt emphasized the tax benefit of the ETF structure. Previously in another interview (I forgot which), he had said he had no plans to launch an ETF himself due to the need for daily disclosure. I wonder if the new ETF structure that the SEC approved recently that allows or ETFs without daily disclosure will prompt him to consider launching an ETF version of the Gotham funds.

I am/was hopeful.  There are a couple of articles on the web (find them via abnormal returns), talking about some of the drawbacks to the new structure though.  QVAL ain't a bad approximation of the long only with maybe more emphasis on the quality and "risk adjusted returns".

 

Edit:  Just watched the interview.  I did not take the joke about the "little secret" to mean his is disavowing its conclusions.  He's made that joke about the title in a couple of other interviews (the book is the secret because no one read it).  Throughout the interview, he restated its analysis on fund manager performance, investors inability to tolerate volatility, to trend chase, to try to market time (and fail so hard) and the conclusions about market-cap weighted indices and their inferiority to equal-weighted and other alternative indexation methods.

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