Joel Greenblatt in an interview with Morningstar says that value investing works like clockwork, but your clock has to be really slow, says the Columbia professor and CIO of Gotham Asset Management. Also check out his books, You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits , The Little Book that Still Beats the Market (Little Books. Big Profits), and The Big Secret for the Small Investor: A New Route to Long-Term Investment Success
Joel Greenblatt video embedded below
A.J. Dasaro: Hi, this A.J. Dasaro for Morningstar. Joining me today is Joel Greenblatt, chief investment officer and managing principal of Gotham Asset Management, the successor to Gotham Capital, an investment firm he founded in 1985.
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Joel is a professor at Columbia Business School and the author of You Can Be a Stock Market Genius and The Little Book That Beats the Market. Today, he is joining me as the portfolio manager for Gotham’s three long/short equity mutual funds.
Joel, thanks for being here today.
Joel Greenblatt: Thanks, A.J.
Dasaro: Joel, you’ve been a successful value investor, and many other investors have been successful following value strategies. If the secret of value investing is out, and everyone knows that it works, can we expect value investing to work in the future or will it be arbitraged away?
Greenblatt: Well, actually the secret to value investing is patience, and that’s generally in short supply now. The reason it doesn’t get arbitraged away is that in typical arbitrage, the usual explanation is that you buy gold in New York and simultaneously sell it in London for $1 more. And what tends to happen in typical arbitrage, there are professionals out there who see those price difference, and so they’ll keep buying gold in New York and selling it in London until the prices converge. That happens so fast that individual investors certainly can’t take advantage of it, a few very quick institutional investors can.
Full transcript http://www.morningstar.com/cover/videocenter.aspx?id=617497