During this interview with The Hedge Fund Association, Joel Greenblatt explained why the stock you just bought will go down after you buy it. Here’s an excerpt from the interview:

Greenblatt: So that’s really a question asking what do you do in every investment?

Because unless you bought at the all-time low the stock goes down after you, or the investment goes down after you bought it right.

You either caught the exact low or sometime after you bought it it’s down. So just know that. It’s always going to be down after you buy it.

I mean unless you caught the low, which pretty sure I almost never did. So it’s good to know that ahead of time that unless you’re a lot better than we have been, and every other investor, you’re not catching it at the all-time low.

And I guess one of the benefits of volatility is it gives you that opportunity. And one of the benefits of that is if the market weren’t followed it’ll be easy and everyone would do it.

And so you have to take pain and you have to have the psychological wherewithal to think that you’re right when the market is going against you. But it goes against you almost every investment. I guess I got used to it.

You can watch the entire discussion here:

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