Joel Greenblatt outlines Buffett, Graham-inspired investment strategy - Business Insider

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Investor Joel Greenblatt is crushing 96% of peers by adding a unique twist to the famed strategies of Warren Buffett and Ben Graham. He shared with us his winning approach.

It all started when Greenblatt stumbled upon an article in Forbes magazine delineating Benjamin Graham's stock-picking formula when he was studying to become a lawyer.

He continued: "From there I just started reading everything that Ben Graham wrote and eventually got to Buffett." Greenblatt's strategy is simple in theory, but without the right emotional or valuation skillset , difficult in practice. It revolves around figuring outleaving a wide margin of safety"You're buying a house. They're asking $1,000,000 for it. Your job needs to be to figure out whether that's a good deal. One thing you might think to yourself is 'if I rented out that house — net of my expenses — how much would I be earning every year?'" he said.

Juxtaposing the business under consideration to comparable businesses, different businesses, and the overall market gives Greenblatt a better sense of whether or not its stock is — you guessed it — a good value.

 

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