Posts Tagged ‘Investing’

Forbes has posted a video and transcript of an interview with Joel Greenblatt.  Greenblatt is the founder of Gotham Capital, an adjunct professor at Columbia Business School where he teaches “Value and Special Situation Investing.”  He is the author of three investment books and, through Gotham, the advisor to four mutual funds, which select stocks based on Gotham’s proprietary system of ranking stocks according to value metrics (essentially an institutional version of the “Magic Formula” from Greenblatt’s The Little Book That Beats the Market)Greenblatt is also the co-founder of the Value Investors Club, a private forum for discussing value and special situation equity ideas.

In the interview, Greenblatt criticizes market-cap weighted indexes and the short-term focus of individual investors and money managers.  He also claims that an equal-weighted basket of value stocks can beat market-cap weighted indexes like the S&P 500 by 6-7% per year, which is what his Formula Investing Funds aim to do.  He also had this to say about value investing in general:

Most business schools do not really teach Benjamin Graham.  There are a few around the country that do.  But for the most case, people are still being taught the efficient market model, and all the math that goes along with that. We kind of feel the way Warren Buffett does: that’s good news for us.  That if everyone’s told you can’t beat the market – and this is the way to go about investing and it makes no sense to you and everyone’s being taught that – it gives a little more opportunity to value investors if you have less competition actually doing the work.

You can watch the video and read the full transcript here.

founded Gotham Capital, a private investment firm, in 1985. Since 1996, he has been a professor on the adjunct faculty of Columbia Business School where he teaches “Value and Special Situation Investing.” He is the author of three investment books: You Can Be a Stock Market Genius (Simon & Schuster, 1997); The Little Book that Beats the Market (Wiley, 2005) and The Big Secret for the Small Investor (Random House, 2011)


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Welcome back, ValueHuntr readers!  In the coming weeks, we will resume regular posts relating to the business of value investing.  In the meantime, we’ve kept some older posts that are still useful and relevant now.  For today’s post, we highlight a timely quote from the latest memo by Oaktree’s chairman Howard Marks.  In this memo, titled “How Quickly They Forget,” Marks comments on investor behavior, memory and risk-taking against the backdrop of today’s “low-return world.”

On risk, Marks had this to say:

Especially since the publication of my book, people have been asking me for the secret to risk control. “Okay, I’ll read the 180 pages. But what’s really the most important thing?” If I had to identify a single key to consistently successful investing, I’d say it’s “cheapness.” Buying at low prices relative to intrinsic value (rigorously and conservatively derived) holds the key to earning dependably high returns, limiting risk and minimizing losses. It’s not the only thing that matters – obviously – but it’s something for which there is no substitute. Without doing the above, “investing” moves closer to “speculating,” a much less dependable activity. When investors are serene or even euphoric, rather than discomforted, prices rise and we become less likely to find the bargains we want.

You can read the full memo here.

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