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)