One of our favorite Joel Greenblatt interviews is one he did with Steve Forbes at Intelligent Investing.
In this interview, Greenblatt explains how small investors can still beat large institutions. Greenblatt also discusses why investing in indexes like The Russell 1000 and the S&P 500 are seriously flawed even though they beat most active managers.
He highlights why value investors can benefit greatly from today’s short term focus when it comes to holding value stocks saying, “Simple value factors have actually gotten stronger because the world has become much more institutionalized [due to short-termism]. Every time a fund underperforms, people leave. Every time the market goes down, people leave.” Investors chasing outperformance actually underperform.
He illustrates why Enterprise Value is a great way to value a business, and why concentrated portfolios with 20-30 stocks perform better, like we do here with our Deep Value Stock Screens at The Acquirer’s Multiple.
In terms of the future Greenblatt says, “Most business schools ignore value investing, focusing more on the efficient market model and all the math that goes along with that.” As Warren Buffett says, that provides even more opportunity for value investors today. It’s a must watch video for serious value investors.
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