Joel Greenblatt: The Genius Behind Magic Formula Investing
Hello Traders & Investors!
Today, let’s explore the incredible journey and wisdom of Joel Greenblatt , one of the most respected value investors in modern history. Known for his bestselling book “ The Little Book That Beats the Market ,” Greenblatt introduced the revolutionary Magic Formula —a systematic way to find undervalued companies with high returns on capital. His strategies are simple, yet powerful, and have consistently delivered outstanding results.
Who is Joel Greenblatt?
Joel Greenblatt is the founder of Gotham Capital , where he generated an annualized return of over 40% for two decades . He believes that investing should be logical, disciplined, and backed by strong fundamentals —not based on hype or speculation.
Key Principles from Joel Greenblatt's Investing Style
Use the Magic Formula: Focus on companies with high earnings yield and high return on capital —this filters out fundamentally strong yet undervalued businesses.
Stay Rational, Not Emotional: Ignore market noise. Stick to your strategy even when the market seems irrational.
Long-Term Patience: His formula doesn’t work overnight—but over time, it consistently beats the market.
Simple is Powerful: Greenblatt believes in simple metrics and systematic investing to remove emotional decision-making.
Focus on Fundamentals: Buy businesses, not stocks. Evaluate them based on their financial strength, consistency, and potential for growth .
What We Can Learn from Joel Greenblatt
Stick to the Process: Greenblatt’s biggest success came from trusting his system—not market noise.
Invest in Quality at a Fair Price: A great company doesn’t always mean a great investment— valuation matters.
Don’t Chase the Crowd: His strategy is often contrarian. Buy when others fear, and hold with conviction.
Conclusion
Joel Greenblatt has shown that you don’t need a complex system to succeed—just a logical, disciplined, and repeatable strategy. If you’re serious about value investing, his Magic Formula can be a game-changer .
Have you tried Magic Formula Investing? Or read Greenblatt’s books?
Share your views in the comments! Let’s learn together and grow our investing mindset.
