Joel Greenblatt's Interview with Steve Forbes

Joel Greenblatt on CNBC

Exclusive Joel Greenblatt's Video

The Value Investing Congress brings you a complete video presentation of one of our featured speakers — Joel Greenblatt’s Formula Investing with a Value Mindset, from the 5th Annual New York Value Investing Congress! To view the video, visit http://bit.ly/2lZAdT.

Answers from Joel Greenblatt are Here!

Here are the Questions & Answers:

Question 1. While reading your biography or rather from what is available on the internet, I noticed you graduated in 1980 and founded Gotham in 1985. I was wondering what you did during that 5 year interim ? Did you work at a hedge fund or in banking, and if so in what area? (Bertrand)

Professor Joel Greenblatt (JG): After graduating Wharton with an MBA in 1980, I decided to go to Law School to avoid taking a real job. After my first year, I decided that going to law school if you didn’t want to be a lawyer was perhaps not the best idea in the world. I took a job at a start-up hedge fund at the end of 1981 doing mostly risk arbitrage and special situation investing and started Gotham Capital in 1985.

Question 2. Some notable investors such as Benjamin Graham, Philip Fisher and yourself are also well respected teachers. In your view, do good teachers and intelligent investors share any particular qualities? (batbeer2)

JG: I think to be a good teacher you need to understand your subject very well and that enables you to explain things in a simple way. I think the exercise of trying to figure out how to simplify concepts has been incredibly helpful to me over the last 13 years of teaching and I hope my students have benefited from it. I certainly have. I’m guessing that the other investors you mentioned who wrote about and taught investing felt the same way.

Question 3. In my opinion your two books are the best investing books out there. Do you have any plans to write another one? If so when and what will it be about? (djswinney, Bertrand)

JG: I do plan to write another book. It will also be about a basic framework for successful investing written in a way I hope my kids can understand. As for timing, I’ll let you know when I finish it! (I hope before they all grow up!)

Question 4. Besides your own books (which are awesome by the way) and books such as the Intelligent Investor, Security Analysis, what would you recommend reading to get a leg up in investing? Any periodicals that you think are worth perusing? (ConsumerMonopoly, AndreHeggli)

JG: A few of my favorites are: “The Essays of Warren Buffett” edited by Lawrence Cunningham, “Moneyball” by Michael Lewis and “The Invisible Heart” by Russell Roberts.

Question 5. How much of your investing success can be attributed to your uncommon emotional temperament? What are the key attributes of being a successful investor? (bart329, rajeev_agr@yahoo.com)

JG: The answer is: I’m not sure. I like to figure things out and I’ve always liked to gamble. I never bet a lot, however, unless the odds are heavily stacked in my favor. So, I guess that’s what I like about investing. It’s a fascinating “game” if you can figure things out and don’t get in over your head with the size of your bets.

Full Article

Peter Lindmark: Simplicity and Focusing on the Big Picture

Our life is frittered away by detail... simplify, simplify." Henry Thoreau

Einstein listed the five ascending levels of intellect as: “Smart, Intelligent, Brilliant, Genius, Simple." Investors are detailed oriented and most never get to simple. Analysts have hundred page spreadsheets and focus intently on miniscule details, which are irrelevant over three to five year periods. Most investors miss the big picture due to their overly analytical minds.

“Keep the big picture in mind.” Joel Greenblatt

Full Article

Lonnie Rush: Benjamin Graham’s Lost Magic Formula in 1976?

While reading these interviews he did between age 79 and 82, I got the feeling that Graham was enthusiastic as he described a new mechanical formula he had nearly finished testing. He believed his formula was the simplest way for both seasoned analysts and layman investors to find undervalued stocks and outperform the Dow (the performance metric used during his time). After 60 years of analyzing financial statements and managements, Graham said this about projecting earnings, evaluating market share, and analyzing individual companies:

“Those factors are significant in theory, but they turn out to be of little practical use in deciding what price to pay for particular stocks or when to sell them. My investigations have convinced me you can predetermine these logical “buy” and “sell” levels for a widely diversified portfolio without getting involved in weighing the fundamental factors affecting the prospects of specific companies or industries.”

Graham further recommended building a portfolio of 30 diversified stocks meeting such criteria. His study employed strict sale rules that required selling the stocks after a 50% gain or after a two year holding period, whichever came first. Graham noted that in the market downturn of 1973-1974 investors using the formula would have shown paper losses but would have been rewarded soon thereafter for sticking with the formula. Thus, to allow time for the program to work he recommended a minimum of five years. In other words, patience was a requirement for success.

Graham back tested the period from 1926-1976 with his refined formula and concluded that such a program would have earned 15% or more, not including dividends, and would have beaten the Dow by twice as much. He was so excited by the study results that he contemplated including them in the 5 th edition of Security Analysis.

Full Article

Joel Greenblatt: Magic Formula Investing

Dear readers,

I hope most of you have read the Little Book That Beats the Market by Joel Greenblatt. If you haven't, please get a copy asap and read it a couple of times.

I have personally read it many times, and have come to conclusion that for most investors, Magic Formula Investing, which is only based on simple combination of earning yield and return on invested capital, is the best way to beat the market over the long run.

Thank you Joel Greenblatt for your generous sharing on MFI.

I truly agreed with Mike Price, who said that this book is one of the most important books ever written in the last 50 years.

Therefore, I would discontinue Lau Model Portfolio to track companies as investors are much much better off following the advice by Joel Greenblatt.

Best,
David

Joel Greenblatt Video: 2006 Columbia Reunion

Joel Greenblatt spoke about magic formula investing and Gotham Capital's method of investing .

Video

Source: Ray Lin

Gotham Asset Management: 13F - HR May 15, 2007

Gotham Asset Management: 13F - HR

Source: Letsvalue

Joel Greenblatt Buys Aeropostale Inc., Sells Lear Corp., Live Nation, Inc.

Famed investor Joel Greenblatt buys Aeropostale Inc., sells Lear Corp., Live Nation, Inc. during the 3-months ended 09/30/2006, according to the most recent filings of his investment company, Gotham Capital.

To read the complete article.