원문 보기
Joel good to have you with us uh let's begin by having you describe this magic formula that enables you to do so well in the stock market and uh you actually wrote a book on it the little book that beats the market and this was several years ago and you're still alive and you're still beating the market so uh can you describe it for us please sure it's really uh basic uh value investing uh you know based on both Benjamin Graham and and and Warren Buffett I started investing back in the early 80s and we were quite successful for a period of time and some of the things that I teach over Colombia and and the reasons why I think we were able to make money I I kind of put down in this book and and there were two main principles one from Graham one from Buffett uh Graham's was uh figure out what something's worth and pay a lot less for it you know so if you can buy it cheap that's a good thing and so we measure cheap by getting a lot of earnings for the price we pay uh so it's really the inverse of the p e ratio uh earnings to price we don't use Simple earnings and we don't use Simple price but that's the same concept we take into account different tax rates and different amount of debt that companies have and things of that nature but basically all we're trying to do is get a lot of very clear Enterprise Value as you say it right so uh the concept what we look at is ebit earnings before interest in taxes to take out companies with different amounts of debt and tax levels which is earnings before interest in taxes and we compare that to Enterprise Value which is basically the stock price plus the amount of debt per share that a company has so we're just sort of leveling the playing field for companies that take on debt and companies that don't but when you buy a a share of stock what you're really doing is uh paying for the equity but you're also assuming the debt that the company took on so we're taking that into account but really all we're doing is comparing the earnings of a company to the price that we're paying uh the other concept uh sort of what Warren Buffett brought to the table I think from his teacher Ben Graham was well cheap is great but if I can buy something that's also good in addition to cheap so if I can buy a good company at a cheap price that's even better than just looking at cheap alone and so we use a concept uh which is we turn on uh tangible Capital really also learned from Buffett which uh basically says a business to operate needs working capital and it needs um fixed assets uh and the question is how well does a company turn the working capital fixed assets into earnings so we compare earnings to network and capital plus fixed assets to see what kind of return on tangible capital capital a company can earn so the higher the better I gave an example in the book uh I was actually uh trying to explain this concept to my son and we were going to school one day and uh the gum yes and we saw and we saw uh one of his friends and you know my son starts telling me the story that his uh his friend goes to the candy store every morning buys a few packs of gum he pays 25 cents for a pack there's five sticks of gum in a pack and in school since it's tough to get the gum you can sell each stick for about 25 cents each so he collects a dollar and a quarter for a pack that he paid a quarter for and he earns a dollar uh for each pack that he can sell in school so he's making three to five dollars a day you know just selling gum in school uh so I told my son imagine that uh this uh uh kid Jason grows up and he opens a gum store and calls it Jason scum store and each one of those gum stores cost four hundred thousand dollars to open for inventory for the uh displays and the store itself it's four hundred thousand dollars each year that store earns two hundred thousand dollars so we look at that as a 50 return on Capital if he can lay out four hundred thousand dollars once and and it spins out two hundred thousand dollars a year that's a fifty percent return on capital for each store that he can open then I told my son to imagine another store they'll call it just broccoli and all it sells is broccoli and it still costs unfortunately four hundred thousand dollars to open that store but each year that store only earns don't ask me how ten thousand dollars a year and that we said ten thousand dollars divided by four hundred thousand to two and a half percent return on Capital and when we rank businesses we say fifty percent return on capital is better than a two and a half percent return on Capital so what we did for the what I called the magic formula in the book is we rank all companies based on their return on Capital and we also rank all companies based on how cheaply we can buy them relative to their earnings the more earnings the better then we combine those rankings and the companies that have the best combination of that ranking go to the top so we're not looking for the cheapest company we're not looking for the highest return on Capital company we're looking for the companies that have the best combination of those two attributes and uh this is what I've been teaching for years and years uh but I never really had a proof of concept really I never statistically poofed out does this make sense and so about seven or eight years ago I started a project you know I had the resources to start a project to actually go back and test what if we did this on a consistent basis over time and uh the way it worked out was that uh you could basically uh if you just bought the top stocks you know and and we're talking you know top thousand stocks you could basically double the returns of the S P 500 just sticking with this formula over uh uh how uh by the way how large is the universe how what what kind of liquidity factors do you right so we looked at the uh we did two tests we did smaller cap stocks you know probably the top uh 3 500 stocks but then we said well what if you can't really buy these so we also did a study which I just mentioned on the top thousand companies the largest thousand companies roughly usually about 20 of the actual publicly traded Universe how do you account for quality of earnings and uh things like Financial companies which once looked very cheap in the 2006-2007 but there was a reason why they were cheap right well that that's a good uh point and it's gonna be tough for me to answer because one thing we look at ebit as one of our earnings earnings before interest in taxes if you look at a bank before interested kind of doesn't make a lot of sense right so in our analysis we we eliminated uh certain types of companies uh really two types one were financials they're different animals and and the Met there's nothing wrong with investing in financials in general but our metrics don't cover financials they're they're kind of viewed in a different way and uh this formula does not apply to them I wrote the book in 2005 not anticipating any financial crisis or anything like that it was really eliminated because they weren't really appropriate for financials the other utilities because uh utilities are regulated entities where their returns are regulator they're not really capitalist companies and and so they don't follow the same rules uh as what we're looking for so we also eliminated those in our study it's just not appropriate the the measures we were using so with the exception of those two now over the time period that we looked at back to 1988 through uh you know this year uh if you take out financials or include financials the return of the s p would have been uh within one tenth of a percent the same so the results are pretty robust meaning uh uh you know it didn't matter whether we used financials or not I think the most exciting thing we found in our research though was not that this just worked for finding the best stocks we said well maybe you get lucky picking the top 30 stocks that that meet these criteria so we actually did an experiment and we divided uh the top 2500 companies into deciles the the best 250 according to our formula the next 250 according to our formula the next 250 and we tested this over 18 years and what actually happened was the same thing meaning the top decile beat the second decile beat the third decile all the way down to the 10th decile in order so we're doing something very powerful here we're sort of saying which group of stocks will do best next year that's kind of valuable information if you can put together a group of stocks and say which ones will do the best and um you know this follow through no matter how large the companies we use so it's it's very reproducible uh you know for institutions or you know for a great many individuals uh obviously individuals have an advantage because they can buy smaller stocks but even institutions can take advantage of this now you've had actual experience with this now uh uh well well two things one I wrote the book five years ago so we actually did a test and uh uh over the last we uh we set up a a new test uh to update the book over the last 10 years we opened a firm called formula investing to uh because I got so many emails from people saying thanks so much for writing a book thanks so much for the formula but can you just do this for me so we got enough of those and I teamed up with a gentleman named Blake Darcy who founded dlj direct and we put together a firm to make it easy for people to do this um and and we did a study saying if you follow this principle on the the largest 20 of stocks over the last 10 years what would have happened so the the s p was actually down over the last 10 years ending September uh if you had followed the strategy you would have been up about 288 according to our study which is almost quadrupling your money during a period where the market was was down more importantly I wrote the book five years ago so during the last five years uh this also continued to do very well uh meaning the market was only up about five percent during that period and following the strategy you would have been up about 72 percent so so you would have beaten the market by more than 10 a year during that period after I gave away the secret now uh now that you're applying it yourself do you think more and more people apply it that it's going to become less effective no I think like this is really just a Twist on on value investing and people have known for years uh you know their studies been done for the last 40 years on whether it's low PE investing or a low price book investing or whatever and these things work over time uh and if I had written a formula up that worked every week and every month and every year uh it would stop working uh fortunately this formula is not so great and there are uh you know during explain that you can have years where it's not going to work right so in other words over the last 22 years there have been one year periods formula has not beaten the market uh most people give up on a formula that hasn't beaten the market for the last year or two you know I I sit on a couple of endowment boards and you know there are some studies uh that clearly show that you can predict ninety percent of the money flows just on who did well last year uh and that's where the money goes so uh there's two reasons one the formula doesn't always work even though it works over long periods of time because when you think about it what I think you're doing is buying above average companies at below average prices so you're buying above average companies only when they're available at below average prices and that makes sense over time just doesn't work all the time doesn't work every year have you noticed have you noticed the differences in how the formula Works in up markets and down markets uh yes we've actually looked at that and uh it it outperforms quite well in upmarkets endow markets it outperforms better than uh the market in most periods but not all in other words uh for instance in 2008 uh when we did our latest study uh well and here's another problem with the formula you're 100 long the market if you just buy these so uh the s p was down I think uh 37 percent in 2008 this was down 36 percent so it's a little Solace to anyone that we beat the market there's two things you have to do make money beating the markets only part of it so in this case if you have a long-term Horizon over the last three five ten years this formula has done amazingly well but there are periods when it either loses money because the Market's down or it underperforms the market it's very hard for people to stick with a formula that's telling you to buy out of favor stocks uh that were spit out by a computer nevertheless you know nonetheless um and to stick with that when it's not working so I'm not particularly worried that I wrote a book or that uh so many people will do this that'll stop working um that's also something we have to fight starting a firm that says um you know go follow this formula and I you know I have no uh huge expectations that people are going to change their stripes over time I hope we I I hope people see the results and and like what they see and that's how it's successful I don't expect uh so what what role do emotions uh play in this can we have a period like we had with the Panic where this is just not going to work or even if it or if your point is a time it may not but eventually it's going to come back and come back more right well we really haven't had to be that patient even during this bad period in other words uh over the last five years which haven't been good the you would have been up 72 since I wrote the book versus up five for the market uh there have been some tough periods in between without those tough periods everyone every single person would do this if I printed a formula and it worked all the time and uh there was there were no no volatility to it you know you'd have Bernie Madoff and everyone want to do it but it really wouldn't uh continue to work over time and so your club's not going to get overcrowded precisely because of emotions I think so I think it's very difficult to buy these stocks they're they're all out of favor
댓글 0