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Better Value Investing: A simple guide to improving your results as a value investor by Andrew Hunt

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Chapter 9. Winning in Practice

“If you set out to take Vienna, take Vienna!”

Napoleon

9.1 Mind the empathy gap

“The investor’s chief problem – and even his worst enemy – is likely to be himself.”

Benjamin Graham

Value investing beats value investors

In 2009, legendary value investor Joel Greenblatt set up the Magic Formula Investing Fund to help individuals invest using his well-known Magic Formula.

As we saw in Chapter 5, the Magic Formula is a very simple system for selecting value shares with low EV/EBIT multiples and which are earning high returns on capital. Investors using the platform were given two choices. The first option was to have their money invested with the shares picked and weighted mechanically, according to the formula. The ...

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