Greenblatt: Skip unpredictable businesses with fierce competition and fast tech change
Joel Greenblatt · #111 Joel Greenblatt: Investing Made Simple · May 18, 2021 · at 7:25
Joel Greenblatt, founder of Gotham Capital and professor at Columbia Business School, explains to Shane Parrish why investors should pass on hard-to-forecast businesses rather than attempt complex long-term projections.
0:00 / 0:22exact quote · 22.2s
720p mp4 · rendered on demand · StarZero watermark
“What do you do with a business where the competition's really fierce, technology's always changing, you know, you're always coming up with new products, you know, how do you predict what, you know, when you figure out a value of a business, you're trying to figure out what it's going to earn over the next 20 or 30 years, and what do you do when those things are really hard to figure out? I always say, skip that one and find one you can figure out.”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Joel Greenblatt
Greenblatt: Nikola held a $6.5B valuation despite appearing completely fraudulent
“I was just looking after it's turned out that it appears to be mostly a fraud and they really haven't come up with anything that they promised still has a market cap of six and a half billion.”
Greenblatt: Being too timid on rare good ideas is investors' biggest mistake
“Position sizing is the most important thing. Being too timid on the few good ideas that come your way is like the biggest mistake people make.”
Greenblatt: Position sizes are determined by downside risk, not upside potential
“The biggest positions I've had are not my best ones. The ones that I think will go up five or 10 times. I'm really looking down, not up when I take a big position. So in other words, I will size the position larger if I don't think I can lose much money.”
Greenblatt: US government should lock in 30-year debt while rates are free
“I think our average maturity is like six years. So I think that's insane. I think we should borrow it over 30 years for free. That would be my one suggestion to anyone listening. We should extend our maturities when they're lending us money for free.”
Greenblatt: Past capital allocation predicts future performance better than executive stories
“And the best rule of thumb that I learned was if this management team was good at allocating capital, before I walked in the door, the assumption that they would continue to be good was a really good assumption. And if they were really bad at it, no matter wha…”
Greenblatt: Incomprehensible Financial Statements Usually Signal Intentional Obfuscation
“And I just figure if I can't figure it out, they don't want me to figure it out. And I got to go to the next one. I mean, I'll spend a lot of time doing it, but if I can't figure it out, then I just assume that's intentional. And I don't view that as a good th…”