Joel Greenblatt – The Magic Superinvestor

We are starting a series profiling superinvestors that have made a big impact in the value investing world.

Isaac Newton once said that “If I have seen further than others, it is by standing upon the shoulders of giants.” I hope that through this series you’ll discover new superinvestors to learn from in order to further sharpen your own thinking. 

Up first is Joel Greenblatt. He doesn’t need much of an introduction.

The mastermind behind the simple and effective magic formula, holder of one of the best 10 year investment records at 40-50% CAGR.

Considering that Greenblatt describes himself as self-taught in the ways of value investing after reading Graham’s quant based investing strategies, his results are even more impressive. Then throw in some additional accolades like being an adjunct professor at Columbia University and being classified as a superinvestors at such a young age.

We know all about the magic formula, but investors don’t really know much about Greenblatt himself of Gotham funds.

Let’s dive into some details and get to know Greenblatt a little better.

Lessons Joel Greenblatt After Gambling Money in a Dog Race

When Joel Greenblatt was 15 he had the chance to make some bets in a dog racing circuit.

He was confident in a dog named Lucky which had a 99-1 chance of winning. He was a sure bet because he was fast in all the previous races.

But Lucky was unlucky and lost.

However, Greenblatt realized that Lucky performed best in short races and this story provides a glimpse into Greenblatt’s mechanical approach to investing.

At 15 years old Joel took this lesson to heart. Betting with just a good story and not knowing the facts will only cost money.

He argued that if you don’t know the fundamentals you will lose. This follows closely Graham’s philosophy of value investing.