If you have been living in a cave the past couple decades, it’s possible you haven’t heard of Joel Greenblatt.
I profiled him (briefly) in Tradestreaming. In short, he’s one of the best performing investors in history, putting up 40% returns for something like 20 years.
Greenblatt is a (not so) secret brand
My perspective is a bit different on Greenblatt: I think he’s secretly one of the biggest brands in investing today. Granted, he’s not a household name like Buffett or Lynch. Outside of his groupies, ferociously adhering to the tenets of Greenblatt’s Magic Formula, not everyone has heard of him.
Yet, his performance speaks for itself.
It speaks so loudly that quietly behind the scenes, Greenblatt is transforming his hedge fund leadership into growing a leading, retail asset management firm, Formula Investing. Don’t be surprised if you see this firm managing multiple billions of dollars in the years to come.
What’s awesome about this whole story is that he’s building his (new) business primarily by publishing a small book (it’s little more than a pamphlet, really) with an accompanying basic, free website.
How a book launched Greenblatt’s new gig
Let me explain:
After effectively shutting down his hedge fund, Greenblatt authored The Little Book That Still Beats the Market (Little Books. Big Profits)
This book has a vaunted position on my investing book bookshelf, sitting next to such greats as Lynch, Fisher, and Graham. It’s spawned numerous blogs, websites and stock screeners, all emulating and researching the magic formula. It was published again last year in updated form and the investing world drools for Greenblatt’s next work to drop, The Big Secret for the Small Investor: A New Route to Long-Term Investment Success
Next, he set up a website, MagicFormulaInvesting.com, a free website that does much of the heavy-lifting for investors using Greenblatt’s methods. It screens for top ranking Magic Formula stocks and is updated quarterly. It’s free, it works, it’s great if you want to implement Greenblatt’s ideas. It’s a core tool in Screening 2.0.
Tradestreaming the magic formula
This sat for years as I’m sure millions of people read his book and played around with his website. From here, just a couple of years ago, Greenblatt cofounded Formula Investing with Blake Darcy, founder of pioneer online brokerage firm, DLJ Direct. With Darcy’s leadership and Greenblatt’s brand, Formula has launched a series of managed accounts, self-directed products, and most recently, 4 Magic Formula mutual funds.
Formula has segmented its retail market with different products to reach different types of investors. I like the concept of portfolios-to-go and I’ve been pretty vocal of my interest in portfolio management marketplaces like Covestor. All with pretty darn good performance.
All this from a little book about investing and a whole lot of performance.
When are you writing a book that changes investing history?
