📖Joel Greenblatt
Buy Below Intrinsic Value
Buy only at prices well below intrinsic value.
The cardinal rule of investing: buy only when the price is significantly below your conservative estimate of intrinsic value. This builds in protection against error.
🏠 Everyday Analogy
📖 Core Interpretation
In Buy Below Intrinsic Value, Joel Greenblatt focuses on the gap between price and value. Returns come from paying less than what a business is worth, not from guessing short-term market moves.
💎 Key Insight：Buying below value builds in protection against error.
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❓ Why It Matters
Ignoring valuation turns even good companies into poor investments. Overpaying compresses future returns and leaves little margin when assumptions are wrong.
🎯 How to Practice
Estimate intrinsic value with conservative assumptions, set clear buy ranges, and act only when price offers a meaningful discount with acceptable downside.
⚠️ Common Pitfalls
Confusing a low price with true cheapness
Using one metric without business context
Overly optimistic assumptions that erase margin of safety
📚 Case Studies
1
Post-crisis quality bargains (2009)
Used systematic value screen after 2008 crisis to buy high-ROIC industrial and consumer firms trading at single-digit earnings multiples.
✨ Outcome：As panic subsided, multiples re-rated upward and earnings recovered, producing strong double-digit annualized returns over the next five years.
2
General Cinema Spin-off (1985)
General Cinema separated its beverage subsidiary, forming Coca-Cola Bottling Group. The spin-off was underfollowed and sold by index and legacy holders, creating a mispricing.
✨ Outcome：Greenblatt accumulated shares at low valuations; the spin-off appreciated significantly as fundamentals and market recognition improved.
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