Joel Greenblatt on How to Achieve a 40% Return a Year

Joel Greenblatt, founder of Gotham Asset Management, talks about the investing principles that was able to help him achieve a 40% annual return during his career. Greenblatt is an American academic, hedge fund manager, investor, and writer. He is a value investor, alumnus of the Wharton School of the University of Pennsylvania, and adjunct professor at the Columbia University Graduate School of Business. He runs Gotham Funds with his partner, Robert Goldstein.

Greenblatt introduced the magic formula for investing which uses value investing based principles to identity undervalued stocks to buy and overvalued stocks to short. I’m addition to investing, Greenblatt was an early investor in Michael Burry’s investment fund.

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51 thoughts on “Joel Greenblatt on How to Achieve a 40% Return a Year

    1. Like he said in the video, those returns are totally theoretical based on retrospective analysis of historical data. His actual fund has failed to beat the S&P 500 since inception.

  1. So, just tell us the metrics and ratios with number health checks and tell us which ratios differ on different sectors. Come on.

    1. Nice bro, I’m relatively newbie but I think I got a really good teacher.
      I hold MTY and MED since +- September and I’m up 43%.

      *Apologize in advance if there is any grammar mistake. Learning english 😅

    2. Sebastian no 9 months ago the stock market fell around july it was already recovered i just found some good day/swing trading stocks eveb this week i am up 8.7% while i barely did anything

  2. His fund owns thousands stocks. What is he talking about? That’s an index fund basically. And stocks are bought and sold every few months. The turnover is huge. Nothing to do with B. Graham or Buffett

  3. You can probably get 40% return for 3 consistent years but will lose all of that probably sooner than you can realise. I’m better off getting 20% average return for consecutive years.🙏 Just my take.

    1. We have to remember that we are small investors, so we can achieve 30% avg returns yoy. But we need to put some time and effort on it

    2. High Return != High Risk.
      You get higher returns by being more selective and only investing in things where you have a larger margin of safety.

    1. Step 1: Only invest in sure things.
      Step 2: Be patient, never sell.

      N. B. Of the two, step 2 is the hardest.

  4. How did he know that I check my stocks’ prices 30 times each minute, though? I’m supposed to believe he doesn’t have magic powers?!

  5. 40% ? Lol buy Bitcoin and wait a year guarantee that will be more than 40%. Same with bio nano. Same with jagx. Same with mgti I don’t listen to any analysts anymore and spend 2-3 days DD on a company. If I was only doing 40% a year I’d give up honestly. I’m not bearish in the slightest but every stock I own , apart from chek has done more than 40% in a week

    1. @Dan Lyndon it depends not on a year, bull or bear market, but on how much cash you have. Ofc, that you can’t do 40% with portfolio of 10M dollars or more, because you would be the one who would move market, lol. But if your portfolio, let’s say 10 thousand, you can double or triple that sum every year easily, until it will become large enough that you can’t anymore.

  6. The problem is that an overvalued stock keeps getting more overvalued and the stock getting undervalued keeps getting further undervalued. And the market can be wrong longer than you can be solvent

    1. How are you becoming insolvent owning a stock long? I assume that when Keynes said that he was A) probably talking about professionally investing money for others and probably also using leverage and/or shorting B) saying it somewhat in jest

    2. @Jordan EXACTLY. You can remain solvent for as long as you are patient so long as you’re unlevered. There’s no such thing as leveraged buy and hold investing, much less leveraged value investing.

  7. The difficult thing is not understanding this approach, it’s executing it over a long period of time even when you’re losing lots of money while your friend who’s never read anything made a bundle of money in crypto lol

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