New Joel Greenblatt Book?

[netnet]

Not to quibble, but this is an important distinction.  Greenblatt absolutely does not use P/E.

 

He uses EBIT/Enterprise Value instead of P/E.  This allows for apples to apples comparisons of various companies given varying debt levels, interest payments and taxes.

 

 

 

 

 

1. Less institutional investors.

2. Most stocks are cyclical in commodities industry.No real moat.Very few growth stock that can grow its revenue every year without large cap-ex.

 

To sum up , in small market. Stocks are more volatile in both market valuation (due to less institutional investors) and its business strength .That makes the fundamental-based formulas outperform market substantially .

 

Thanks King for the info on the Thai market.

 

I'm not sure that alot of commodities businesses in a stock market mean that value investing will do substantially better.  (By that reasoning value investors should do better in Canada than the US.)  I would think that the Thai market is just less efficient.

[king888]

The business moat are not high in Thailand. So that causes earning fluctuation. I expressed my point wrong in previous post.It is not actually commodities industry. But I tried to mention that "cyclical" are nature in companies with have no real moat.So they have more risk,they trades on lower valuation. You can buy a basket of these companies "cheap" . Some companies are relied on only one big customer ,some live with only government spending ,some are relied on high commodities price to generate profit. These companies can gain substantially if they win just only 1 new customer, higher commo price or more government spending. But in the other hand,if things went wrong they can be a biggest loser also. So the survivor bias has a high impact when using the formula screen back test. I just take a look and magic formula screen result in Thailand market at the present time, more than half of the top 30 scores companies are fall into "cheap for a reason" category. And some of them are in obsolete ,weak industries. I doubt that they will survive in the next decade or next few year .

 

IMHO, The market inefficient is caused by few institutional investors in market and the businesses here are not that strong.It is less predictable business and has more earning fluctuation .That causes market inefficient also.