Joel Greenblatt, author of
The The Little Book That Beats the Market
, teaches a class on Value and Special Situation Investing at Columbia University. A video from November 3rd is available on the
class website. This video is just over 2 hours long. The first half is about Moody's, but the second half is about
The The Little Book and the studies and principles behind it. He explains why a fund manager would be unable to successfully follow the magic formula, because any lengthy period of underperformance, relative to his benchmark, would get him fired. Investors don't want to underperform the market for a couple of years or more, even if they will soundly beat the market over longer periods of time. The focus on short-term performance gives an opportunity for what he calls "time arbitrage" to those with the patience to stick with their investment strategy (buying great companies at bargain prices) until it pays off.
2 comments:
I liked the fact that Greenblatt said there will ALWAYS be a bull market in time arbitrage, due to the short-term focus of most institutional investors.
Right. Good news for us value investors willing to stick to our guns, eh?
Post a Comment