Legendary value investor Joel Greenblatt of Gotham Asset Management has a new book coming out called Common Sense. In that book, he talks about several policies, including education, immigration, living wages and more. He sat down with ValueWalk to talk about his new book and about value investing.
This interview has been broken down into multiple parts. Click here for Greenblatt's views on immigration. Click here for his views on banking regulations. Click here for Greenblatt's explanation of what's happening with value investing.
The Children's Investment Fund Management LLP is a London-based hedge fund firm better known by its acronym TCI. Founded by Sir Chris Hohn in 2003, the fund has a global mandate and supports the Children's Investment Fund Foundation (CIFF). Q3 2021 hedge fund letters, conferences and more The CIFF was established in 2002 by Hohn Read More
Book on policy
I asked Greenblatt first about why he decided to write a book on policy. He explained that he is a long-term value investor, and he looks at the world in a certain way that could bring value to the discussion.
"Usually a book like this might be written by a politician or a journalist or maybe an economist, and so from a long-term investor's standpoint, I thought I could bring another perspective," he said.
Joel Greenblatt: Education system doesn't work for many students
One of the most important points in Greenblatt's book was about education. He noted that for low-income black or Hispanic students in one of the nation's top 50 urban centers, the chances of them graduating college is one out of 11. Further, he said college graduates earn 70% more than high school graduates, and high school graduates earn 30% more than high school dropouts.
Greenblatt noted that the trillion-dollar education system is failing 10 out of 11 students in major U.S. cities. He is a proponent of charter schools, although he added that some are much better than others. He also suggests something called alternative certification.
"The best example is if Microsoft wants to hire someone for their HR department," Greenblatt said. "What I suggest Microsoft do today is to state publicly what courses, what certificates can you do well on in lieu of a college degree, and we'll consider you for a high-paying job in our HR department or accounting department."
Some suggestions could be literacy tests, online courses or game-based tests, and they would indicate abilities in the areas of analytical skills, subject-matter mastery, creativity, problem-solving or other valuable skills. He calls these other tests "alternative certifications." Greenblatt added that top companies like Google, Microsoft, Amazon and JPMorgam don't administrate tests.
They would just create standards for what they would consider as far as tests and certificates when it comes to qualifying for specific high-paying jobs. The costs of such tests would be much lower than college for students from disadvantaged backgrounds.
"Create a whole ecosystem of supportive resources, whether online or tutoring resources, that would help people prepare for these tests," Greenblatt suggested. "Google already created certificates, created tests suggesting broader standards of what existing or new tests can people pass or certificates that they can be considered for a job."
He added that if companies start setting these standards today, the ecosystem will develop because there will be buyers.
This article first appeared on ValueWalk Premium.