Joel Greenblatt
Joel Greenblatt's framework turns an investing idea into a decision memo: what to check, what to avoid, and what would change your mind. Use the 48 principles below as a checklist—not as buy/sell signals—and verify any numbers or quotes with primary sources. If you're new, start with Value Investing to frame business quality, valuation discipline, and risk, then browse topics to find the rules that match your situation. Pair each principle with a concrete trigger so you can review whether you followed the process after the decision.
- Start with the principles as questions (not trade signals).
- Write down your thesis, risks, and “what would change my mind”.
- Cross-check with scenarios, filings, and your own data sources.
Educational only. This is not investment advice.
"Choosing individual stocks without any idea of what you're looking for is like running through a dynamite factory with a burning match."
About Joel Greenblatt
Joel Greenblatt (born December 13, 1957) is an American investor, hedge fund manager, and author. He is the founder of Gotham Capital, which achieved annualized returns of approximately 40% from 1985 to 2006, and is a professor at Columbia Business School. Greenblatt is best known for developing the "Magic Formula" investing strategy, a systematic approach that ranks stocks based on earnings yield and return on capital. His books explain value investing principles in accessible terms for individual investors. His early success came from investing in special situations – spin-offs, restructurings, and other corporate events that create temporary mispricings. His book "You Can Be a Stock Market Genius" details these strategies with practical examples. Greenblatt later created Gotham Asset Management to offer institutional-quality value investing to a broader audience. He remains dedicated to investment education and making sophisticated investing strategies accessible to individual investors.
Core Investment Principles
The Magic Formula
Buy good companies at bargain prices. Rank by earnings yield and return on capital, then buy the top ranked.
→Systematic Approach
Use a systematic, rules-based approach to remove emotion from investing. Stick to the system.
→Special Situations
Spinoffs, mergers, and restructurings create opportunities where value is mispriced.
→Simplicity Wins
Complex strategies rarely beat simple ones. The best investment approach is one you can understand and stick to.
→Focus on Earnings Yield
Earnings yield (EBIT/Enterprise Value) is a better measure of cheapness than P/E ratio.
→Browse Joel Greenblatt's Principles by Topic
Famous Quotes
"The secret to investing is to figure out the value of something -- and then pay a lot less."
"Buying good companies at bargain prices is the secret to making lots of money."
"You don't have to be a genius to be a great investor. You just need a framework and the discipline to stick to it."
"Over the short term"
"Mr. Market acts as a voting machine; in the long term"
