Professor Joel Greenblatt of the famed Columbia Business School came through Chicago in early December, 2018, to speak to the CFA Society of Chicago.
I’d heard of Professor Greenblatt’s books, and even bought 2 or 3 before the presentation.
The Professor today is possibly this generation’s equivalent of Ben Graham, Warren Buffett’s famed mentor. Professor Greenblatt is at the top of his game and no doubt is attracting serious students of investment management to learn what he knows and to study under one of the best.
Here are the important takeaways from the one hour presentation to the standing-room-only crowd:
1.) Valuation matters
2.) “Value” investing can be defined by low price-to-book ratios, low price-to-sales and low price-to-cash-flow (my favorite).
Without a doubt though the two most important takeaways (in my opinion) from the lecture were:
1.) Of the top-decile portfolio managers for any measurable 10-year time period, at least 41% of those managers (and with my chicken scratch handwriting, I couldn’t read in the handwritten notes if that number was 41 or 47) spent at least three years in the bottom decile of performance rankings. The point being top flight portfolio managers can go long periods with poor relative performance and not looking so smart.
2.) The “Big Secret” (one of the Professor’s books with the same name) is really just about patience: Find an investment strategy that you are comfortable with and that makes sense to you, and stay with it.
Summary / conclusion: For me personally, this was one of the best events I attended all year. The substance of the lecture was pure gold and just as straight-forward and plain spoken as you’d expect from Mr. Buffett himself. If you are an investment professional and aren’t supporting or attending your local CFA events and presentations, you’re missing out on so much rich material. The Chicago CFA Society does a great job for the greater Chicago investment community.
Notes from Professor Greenblatt’s entire lecture will be up on the CFA Chicago blog at some point, if they aren’t already.
Happy New Year to all www.Fundamentalis.com readers.
Thanks for your regular reading.