Joel Greenblatt's Investment Strategy: Simple Yet Powerful

In this video, we delve into the investment strategy of Joel Greenblatt, a renowned investor and author. Greenblatt emphasizes the importance of value investing, which involves identifying undervalued companies and buying their stocks at a discount.

One crucial metric for Greenblatt is the return on capital employed (ROCE). By calculating a company's ROCE, investors can determine how well the company is utilizing its capital. Greenblatt stresses the importance of investing in companies that use their capital efficiently, as they are likely to generate higher profits and returns for shareholders.

Contrary to popular belief, Greenblatt argues that stock market volatility can be an investor's friend. While many investors fear market fluctuations, Greenblatt believes that volatility presents opportunities to purchase stocks at lower prices - if one is diligent in their research and willing to wait for the right moment to invest.

However, Greenblatt also acknowledges the systematic flaws inherent in index fund investing. Index funds offer investors diversification but are often beholden to the whims of the overall market. Greenblatt suggests his own strategy for index fund investing, which involves buying only the top-ranked stocks in his proprietary formula and rotating out of stocks that fall below a certain threshold.

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