Joel Greenblatt: Seeking Value, Minimizing Risk, A Strategic Approach to Stock Selection

In this interview with Satovsky Asset Management, Joel Greenblatt discusses how to find value, minimizing risk, and his strategic approach to stock selection. Here’s an excerpt from the interview:

Greenblatt: Yeah usually when things go bad I hide under my desk, that’s me no.

I would just say I’m human and I’ve made I guess what’s good is if you have a plan and you know a process and you know how to invest in stocks you really have to know how to value businesses.

You don’t have to be right all the time but you have to know how to value businesses because that’s what stocks are, their ownership shares of businesses.

Yep, so unless you’re going to do a portfolio, like diversified portfolio, and maybe have a systematic process like I outlined, or put into an index fund, or something of that nature you have no business investing in individual stocks unless you know how to value businesses.

So that’s one of my skill sets that I learned. But I went to school a long time. I studied it. I enjoy it. Yep, and I’m decent at it.

I wouldn’t say I’m great but I’m decent at it and I’m very disciplined. So I know I’m gonna be wrong sometimes but I leave a large margin of safety between what I think something’s worth and what I pay for it.

And even when I’m wrong maybe I don’t lose much or maybe I don’t lose anything, maybe make a little, but not as much as I hoped.

And so you have all those concepts in mind when you’re picking stocks and over time I think we’re pretty good at it and the more I know something the less upset I get when things go against me.

Because when you think about it unless you bottom-tick a stock, or fund even, or the stock market, unless you get the exact bottom it’s down after you bought it every time. It’s almost like you never bottom tick so every time you buy something it’s down from where you bought it.

You can watch the entire discussion here: