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Joel Greenblatt Knows How to Invest In the Future

Joel Greenblatt’s most recent book, “Magic Formula Investing” deals with the basic philosophy of buying stocks from high earning companies cheaply that will then yield high returns on your investment. There exist only one Magic Formula Fund which is reporting recording stocks as of this day .


This idea follows  the launch of his online money management company, Formula Investing, last  October, in which he offers clients “a unique stock screening system, and a disciplined approach to managing portfolios of high value stock” for them. He is also the author of “The Little Book That Beats The Market”, which was on the NY Times bestseller list, as well as “You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits”, published back in 1997.


Born in Great Neck on the north shore of Long Island on December 13, 1957, Greenblatt, served as the former chairman of Alliant Techsystems, and is the founder of  the New York Securities Auction Corp. He also began Gotham Captial, a hedge fund backed by Michael Milken (the infamous “junk bond king”) in 1985.
In addition to his devotion to investing on Wall Street, Joel Greenblatt firmly believes in investing his own money in New York City’s educational system, particularly those schools catering to minority students.


Not only did he gift $2.5 million to the Ozone Park, NY elementary school PS 65Q, whose student body is primarily made up of kids from South Asian and South American immigrant families, but he also held found a charter school in Manhattan known as the “Harlem Success Academy” in 2006. Both schools continue to receive his support and have merited high marks for their growing academic achievements. In addition, Greenblatt serves on the board for the Institute for Student Achievement, which works to develop small senior high schools out of  larger ones in order to raise the standard of education in communities across the country.

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Stock Dividends And Their Benefits

When any company makes a profit, the directors may divide the profit among the stockholders as ‘dividends’ or they may decide to use it to expand the business. Dividends may be paid only out of the company’s profits only. When profits are used to expand the business, the directors and stockholders may decide to issue more stock to show that there is more money invested in the business. The new stock will be divided among the stockholders as a ‘stock dividend’. Hence, stock dividend could be conveniently defined as the distribution of extra shares among the stockholders or investors of the company.


Many companies and financial institutions offer shares to the investors in order to generate money for the organization. The investors also put money in the organization through these shares. Such an investment is greatly dependent on the reputation and performance of the organization. Hoping to get good returns in the form of cash dividends or stock dividends is the main reason behind making these investments. There are many advantages of stock dividend. Firstly, no tax is levied on such dividends, much to the relief of the stockholder.


In case a stockholder earns some stock dividends from the company he invested in, he or she is not expected to pay any type of tax on that until he or she decides to sell the additional shares. Secondly, the stock dividends earned by the stockholder enables him or her with additional ownership in the organization, which in turn may prove profitable to the stockholder in the future. The stock dividends are given to a particular stockholder depending on the number of shares he or she holds. How lucrative a certain stock dividend is going to be; again depends on the performance of the organization in the market.


I might add here that I am the stockholder in a few companies of good standing in the commercial market. I have always been a little skeptical before investing in any stock or shares. Somehow, going by the sea changes that have been happening in the economic scenario, I have always opted for cash dividend instead of stock dividend. Cash dividend is one way of ensuring that you have ready cash on your hand at the end of the year based on the company’s earnings. This money can be utilized for reinvesting, if need be. What if you opt for stock dividend, and suddenly the company does not perform well and reports sick, all your shares will nothing but worthless pieces of paper. You will have to again wait with bated breath and hope that the company is revived with a rehabilitation package in place.

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