Formula investing

Formula investing

A formula-based investment technique in which investment decisions are made using predetermined timing or asset allocation models, e.g., dollar cost averaging.

Formula Plan

An investment strategy that calls for the buying and selling of securities according to a set formula. Both long-term and short-term formula plans exist, as well as high- and low-risk plans, but most rely heavily on previous market indicators. For this reason it is difficult to include a new issue of stock in a formula plan. Formula plans aim to eliminate personal opinions, emotions, and judgments from investing by never deviating from the formula.

Formula investing.

When you invest on a set schedule, you're using a technique known as formula investing. You're formula investing when you dollar cost average, or make investments to maintain a predetermined asset allocation.

One appeal of this approach, for investors who follow it, is that it eliminates having to agonize over when to buy or sell. It also encourages regular investing. But it does not guarantee your portfolio will grow in value or that you won't lose money.

References in periodicals archive ?
Formula investing is a strategy that seeks to limit the role of emotions in investing by adhering to a strict set of rules.
NEW YORK -- Formula Investing announced today the launch of four new separately managed account strategies, consisting of international companies for both individual and institutional investors, based on Joel Greenblatt's fundamentally-based quantitative value methodology of selecting stocks.
Ever since we started Formula Investing last year, our clients have asked us when we would take our domestic equity strategy and apply the same disciplined, quantitative approach to international stocks," said K.
Formula Investing will typically purchase stocks for its client portfolios directly in a stock's originating country.
These new approaches represent the next evolution of Formula Investing and demonstrate a commitment to providing a suite of investing styles that help individuals and institutions invest in a known value strategy.
The proprietary quant strategy Formula Investing uses constructs client portfolios of value stocks with the objective of outperforming broad market indices over the long term.
Formula Investing is dedicated to transparency and is one of the first registered online money management firms to allow clients to view their account holdings and portfolio performance online, on close to a real-time basis through a dedicated proprietary website.
The development of this first-of-its-kind application for the iPhone is yet another opportunity for Formula Investing to help investors stay connected to their portfolios of stocks in a fast and convenient way," said K.
There is also a special section where users can review the latest Formula Investing news.
Formula Investing uses a system that determines portfolio selections through a logical and proprietary quantitative model that chooses stocks based on a combination of their relative cheapness and quality, as measured by earnings yield and return on capital.
While the firm believes investors should have a long-term focus when investing their assets through Formula Investing, there are no penalty charges for closing an account at any time.
Speaker Joel Greenblatt, Co-Founder and Chief Strategist for Formula Investing LLC: