Even Greenblatt Can Be Wrong

I saw Joel Greenblatt on CNBC at the start of the May promoting his investment approaches.   Back then he recommended four "value" stocks: KSS, MSFT, BBY and HPQ.   Just like the formula of late, those look to be disastrous stocks.

KSS was 49.39 back hen and is now 52.14.
MSFT was 30,33 and is now 26.71.
BBY was 20.46 and is now 11.96.
HPQ was 23.94 and is now 11.71.

What is going on here?  I think the world in changing too quickly for MFI. Last year's earnings are becoming a poorer and poorer proxy for the future.  The retail space is going through a digital transformation. The computer space is changing quickly as new ways of getting on line Suchan iPads and smartphones take over consumer's pocketbooks. I got my first ever iPhone a couple weeks ago and also have an I pad. I definitely use my Lenovo less and less.

Then things are also very volatile globally, with Chinese bubbles, real estate bubbles, European sovereign crisis etc. finally, toss in fed policy, which is crushing saving companies like insurers and fiscal policy (the cliff) and perhaps there is no surprise that methods that have worked in the past are not so successful.

I did double my position in NUAN after their sub-par earnings last night. I am a real believer in AI/voice technology. I use it all the time and it just keeps getting better and better. Pretty soon, we will be likeStarTrek, just hold up our smartphone and it will translate for us.

Have a great thanksgiving everyone.