Joel Greenblatt: Turn Over A Lot Of Rocks To Find The ‘Easy’ Investments

During this interview with Investors’ Chronicle, Joel Greenblatt explained why investors need to turn over a lot of rocks to find the ‘easy’ investments. Here’s an excerpt from the interview:

Greenblatt: I think everything is hard. The market is emotional in the short term, but eventually gets it right. And that’s one of the things I promise my students first day of class, I say that if they do good valuation work, the market will agree with them. I just never tell them when.

There are plenty of opportunities because of emotion, news articles, and people reacting to other people’s reactions. A whole slew of things. There’s nothing super simple. That’s why I think, as you out it and Buffett puts it, knowing your circle of competence is important.

I’ve generally been a generalist. When I was doing special situation investing with very concentrated portfolios, I really could be very patient because I only owned a few things at a time. I only tried to have a few good ideas every year. If I could have a couple good ideas, that was great.

I was always looking for the easy ones. I guess, as Buffett would put it, I was looking for the one-foot hurdles, not trying to jump over the 10-foot ones. Those don’t come along, and even if they come along, you’re probably not going to recognize them. So you’re always turning over a lot of rocks, looking in places other people aren’t to find those kind of easy ones.

I think that’s how, when I had a concentrated book, I’ve been together with my partner, Rob Goldstein, since 1989. We would just look under a lot of rocks to find the few really good ones.

I don’t think it’s easy. There are times in which certain things become easier or not.

You can listen to the entire discussion here: