Joel Greenblatt: Picasso at a Yard Sale: Investing in Unexpected Places

In this interview with The Knowledge Project, Joel Greenblatt discusses the importance of finding investment opportunities in unexpected places, drawing inspiration from his in-laws who scored paintings at off-the-beaten-path auctions. It’s not about predicting the next Picasso, but finding undervalued gems where others haven’t looked. Their success came from:

Looking beyond the mainstream: Not following everyone’s investment trends and seeking opportunities in overlooked areas
Valuation expertise: Having the ability to assess the value of these hidden gems before the crowd catches on
Recognizing transient opportunities: Understanding that once others discover the opportunity, the value proposition changes

Here’s an excerpt from the interview:

Greenblatt: When I got started, and I wrote You Can Be A Stock Market Genius about it.

I opened up that book by talking about my in-laws who used to have a weekend house in Connecticut and they would spend their weekends going to country auctions and yard sales and you know galleries off the beaten path.

And when they found a painting that they liked their question was not, is this painter going to be the next Picasso?

That’s really hard. Their question was is there a painting by this same artist that just went up for auction at double or triple the price that I can buy it for here. In a similar genre.

So in other words that’s a lot easier to do. Their genius, or their advantage, came from finding it in a place that’s off the beaten path.

And so I think, at least in my career when I’ve tried to look at things that were complicated or different or just not what everyone was looking for, or the way people were looking at it.

It didn’t come from being better at analyzing businesses it came from finding the opportunities in places that other people weren’t looking and having some ability, some ability, to value it.

The way… if everyone found this opportunity they would value it too. So it’s more like that rather than deciding that this guy’s gonna be the next Picasso, or this business is going to be the next big thing.

You can watch the entire discussion here: