Niederhoffer read the writings of people know, when Wall Street fame, hedge fund annual return on a

Joel Greenblatt specially done early trading on the stock price is lower than the liquidation value of the study, the research direction and later became his master's thesis. vanesse Prior to his work after reading vanesse Graham go to law school, and was running a fund to buy those prices are lower than the liquidation vanesse value of the stock, Graham called pure profit (netnets). Greenblatt and his two friends all the data entered into the computer and found Graham wrote many years ago, the formula still works very well. Greenblatt found that the market was constructed by using the method of Graham's stock portfolio performance than usual stock index is better. The research was published in the "Portfolio Management" magazine. Before going to law school, Greenblatt from his father's friend raised $ 250,000 to operate this fund is mainly used to buy those trading below liquidation value of the stock. Although this time fund operations only two or three years, they won a total of approximately 44% of the accumulated earnings. Later, Greenblatt vanesse has its own full-time job, do not think it appropriate to maintain this fund to put it off.
The purchase price is lower than the liquidation value of those stocks in? This reminds me of Victor Niederhoffer. Victor Niederhoffer in the "Wall Street gamble" to "Truth is not used for falsification confirmed" as a criterion, since he is good at using statistics, with detailed data to prove to the seemingly popular effective "truth" challenge, including Benjamin Graham and Warren Buffett. In Niederhoffer's eyes, Graham is just a "fabulous market hero." He talked about two issues related to Graham, vanesse one question Graham net cash liquidation value at less than half the time to buy stocks; Another is Graham's performance problems.
In the first question, vanesse Niederhoffer cites a man named Victor. He said that this person engaged in the acquisition Victor management vanesse business for 35 years, have visited thousands of private companies. He found a similar format of the company, but also not a merger. And according to Victor knowledge, no other company can at this price to acquire another company. 1930 may provide such a deal, but now that seems to have Graham features, but has not been annexed enterprises are actually "just something to confuse the people." Niederhoffer believes that the possibility of being deceived from the purchase of such companies vanesse is much greater than the possibility of profiting from. He said the daughter of Victor Ethernet systems have to buy a stock, it is worth $ 50 per share in cash, while the price is only $ 30. Victor Victor's vanesse daughter, according to the proposed purchase it, but soon after buying fell to $ 2. So fast loss to calm her down, she finally gave up the initial value investors are prepared to do a professional vision.
In the second question, Niederhoffer think there is a huge gap between Graham's value investing theory and practice of investment operations, so he's in charge of the fund is not as dramatic legend. He said Graham in the 1930s, when the liquidation appalling performance. vanesse In the late 1930s to re-enter the market in 1956 out of the market, missed opportunities Mean refers to 1000 in the next 20 years, rising from 500 points to. A fund and a student Graham to operate according to his method in 1976-1996 than in earlier vanesse years, the performance of the S & P 500 index performance is poor. And Graham did not follow his own unique way to buy a GEICO insurance stocks, they get in return is significantly higher than the sum of the method in accordance with his own investment returns obtained. Graham looks really good for nothing, the final conclusion is naturally "gradually reduced to Zeus and Hercules greatness of faith, we suspect that the father of value investing legend fate will not be better than God."
For the second question, Graham was indeed trapped in a "dark forest", it is because he used the leverage. vanesse His account margin debt ratios as high as 44%. Graham later recalled that he deliberately away from the dangers of securities, but his money is borrowed, it was a mistake. "Since then, I can not make such a mistake." According to Alice Schroeder vanesse disclosed in the "snowball" in because tax reasons, the 1936 Graham and Newman will be the company reorganized into two companies - Graham - Newman and Newman - Graham Company. Which Graham - Newman Company issued shares to the public in exchange-traded. In Graham - Newman's 20-year operation vanesse period where (1936-1956 years), it's 2.5% annual rate of return higher than the performance of the stock market. On Wall Street history, only a few people can break this record. 2.5% of this figure may sound trivial, but after 20 years of compounding, which means Graham - Newman's investors finally able to earn 65 percent on average than those who get market returns. More importantly, these ultra-high risk Graham get benefits while facing vanesse even lower than those who only invest in the stock market. I do not know why Niederhoffer failed to see this.
Niederhoffer read the writings of people know, when Wall Street fame, hedge fund annual return on average once Niederhoffer vanesse managed a staggering 35%. To this end he spirited, wrote "The Godfather Niederhoffer speculative memoir." vanesse However, the book published less than a year, the Southeast Asian economic crisis, there have been significant Niederhoffer investment mistakes immediately, its fund being wound up warehouse explosion, a full two decades of speculation achievements in vain. After that, he was writing a column, and compiled and published in 2003, this is the "Wall Street gamble" comes from. A book in front Niederhoffer also extremely conceited; but after it becomes a book seems Wenliang Qian Christine - but in fact the core of his thinking has not changed. 2002, Niederhoffer comeback, and maintained an average yield of nearly 50% of. Unexpectedly, the 2008, the sudden subprime crisis once again swept away his wealth, the number of years of high earnings and once again exhausted its funds forced liquidation, but he questioned Buffett has weathered the the financial crisis. vanesse It is no wonder Michael Lewis said Niederhoffer Wall Street is just a "third-rate broker" fills in "Liar's Poker" in the.
Greenblatt is a faithful disciple of Graham. Graham said that if strict accordance with the standards vanesse of his purchase of 20 or 30 companies, even without further analysis, "The result should be very satisfactory." Greenblatt believes, in fact, Graham 30 years using his formula was a huge success. Graham demonstrated a simple way to find not only provide security but also provide cheap stock sustained high rates of return on investment. Graham's proposal is that by buying some cheap stocks so that investors can earn high returns safely, but do not worry about the purchase price is too high, and do not carry out complex analysis of individual stocks. Greenblatt said, according to Graham's method, if you pay a relatively cheap price for something, then you can get a non-symmetrical forward earnings and has a large potential gains.
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