원문 보기
hi JJ here with the outer value well Joel Greenblatt one of the greatest investors of our time of all time he got over 50 compounding for well over a decade and he's not done yet he gave an interview recently where he talked about investing what value investing means to him and the opportunity that he sees for Value investing the way that he does it in the coming period he thinks it's going to way outperform the market so he explains what he's doing the interview was with ETF think tank and I'm going to leave a link to the full interview in the description but right now we're going to look at a clip of what Joel Greenback says about how investing's fund to him and how also it's important investing is really a fun career it's like solving puzzles all the time which is a lot of fun but you know we're not saving lives and everyone I think to some degree needs to understand some investing because you know everyone tries to earn a living and it would be nice to know what to do with that money and you have to save for the future and so I think it's important to everyone and it's important to know what you do know and don't know and keep learning I wanted to start with that because I think it's a really good description of being like a puzzle investing is like a puzzle and it's fun but it is important because everybody wants Financial Security and we need we save money but we also need to invest it so I think that's a really amped description of investing so let's see what else he has to say this time he gets asked about what a value stock or what value investing is to him our definition value is figure out what it's worth uh pay less I'm just going to cut in here for a quick second because I think that's a really great definition as well work out what it's worth and pay less that is what value investing is in one short sentence okay let's go on sheep is based on valuing a business it incorporates growth it incorporates all the elements of what goes into what are the cash flows you're going to get for the next 30 40 years which has to incorporate growth it incorporates the risk of whether those earnings are going to show up or not that's your discount rate to figure out whether it's going to show so all those things are Incorporated and valuing a business and so think on our definition of value investing is merely value a business that's what stocks are try to pay less than it's worth on out and we try to do it in a bucket we try to be right on average so we used to be very selective and have very concentrated portfolios and do deep Dives on everything now we're sort of in the insurance business on average trying to do a great job and buying a bucket of socks that are going to work out over time in both ways of making money are great and you know they're both full-time jobs so we've shifted more to running a big research team with a big Tech team that balances risks and goes along short just takes advantage of our evaluations okay there's Joe's longer definition but also he explains how he invests when he talked about owning being focused in the past earning just a very small group of stocks that's similar to what Buffett did in the beginning years ago he used to be very concentrated very focused maybe five stocks sometimes or less but definitely under 10 do a lot of analysis where look at what it's worth and pay less and that's how we got that 50 compounding but now he works with a lot more money which is Buffett has said The more money that you have the harder it is to earn a good return so the way that he does it now he has a big research team which we can't do as individual investors retail investors he's got a huge team and they analyze the basically the whole S P 500 and every stock and kind of have a big bucket it's not concentrated far from it has changed with the amount of money that he's investing obviously when you when you're making when you make 50 percent compounding a lot of people want to give you money to invest so he does it a little bit differently now so next he talks a bit more about how they go about valuing companies it involves being like a private investor buying the whole company so ownership shares of companies valuing the company as a whole it starts talking about the value investing in relation to momentum investing how it's so different and that he thinks value is the better way to go Russell or Morningstar I have a particular definition and it may involve low price book low price sales and those are merely metrics and and don't really mean anything to me to be honest uh stocks are ownership shares of businesses that we value and try to buy at a discount like we're private Equity investors and no private Equity investor will go buy a whole business because it's selling at a low price to book Ratio or low price to sales Ratio or because you know momentum was really good this year just imagine if I came to you with a real estate investment strategy that says yeah I'm just going to buy all the houses that went up the most last year you know hopefully you throw me out of your office so again he reiterates that stocks out ownership shares of businesses not Bits of Paper and they're not we don't just buy them because they're going up some people do momentum investors he thinks families the better way to go and he starts to explain that you could have been right for a decade playing that strategy But ultimately proven wrong yeah I agree I'm just just well no I mean I I look at it this way stocks are not pieces of paper that bounce around that you put shop ratios and sortinos on their ownership shares of businesses that you buy uh your value and try to buy at a reasonable or good price uh and companies are valued based on their cash flows over time what are what are the cash flows and what are they expected to be on a normalized basis what are they expected to grow and that's all value is and so if you value something and try to buy at a discount That's What I Call Value investing uh growth is component of value so you know the way Wall Street divides all these categories up mean not that much to me he also talks about how growth as a component of value which Buffett has talked about before talking about growth and value are joined at the hip there's really no such thing as value stocks or growth stocks growth is part of value so you have to Value when you're valuing a business you value that growth as part of it so that's important to him a lot of people kind of missed that just talk about this bucket of value stocks where they're not really talking about value investing they're talking about something different so I think this next bit's and important he talks about momentum specifically momentum is done better than value over the last decade we could say not maybe for the last year or so so much but for the last decade people have just rode the momentum and bull market but he's he says what if it doesn't work for the next few years what if it doesn't work for five years what then you just left with valuing the company what's the fundamental what are the fundamentals of the company what's the company worth that is value investing to him okay well it's worth pay less oh but to answer your question about momentum let's say uh and I agree momentum has worked for 30 40 years you know just so we have decent data about it not just in this country but across the globe maybe one or two exceptions that hasn't worked but it works over time I'm not arguing that point the point I would argue is that uh what if it didn't work over the next couple years it could be that it's you know it works over the long term you just have to be patient and you know hang in there uh if it didn't work in the next two years or it could be that you know a lot of people know about momentum it's a crowded and degraded trade and that's why it doesn't work over the next two years two years from now I would know the answer to that question however uh if I am actually valuing companies uh like someone who's buying the whole company based on cash flows and that didn't work for the next two years I'm not gonna stop doing it that's what stocks are their ownership shares of businesses that we value try to buy at a discount so I'm gonna stick with my guns because that's what stocks are and I made a promise to my students first aid class every year of 23 years I said if you do good valuation work I guarantee the market will agree with you I just never tell them when you know a few weeks could be a few years whatever uh it might be but the market eventually gets it right you know anything that's uncertain eventually becomes more certain you know the the right answer comes out over time and you know it's it's crisscrossing with value it's not necessarily going to stay there and exact value and what is value and obviously the future is uncertain but uh the market will recognize if you do a good job of valuing businesses the market will recognize that value uh within a reasonable amount of time you know hopefully you know a big chunk of the time in the next two three years sometimes you have to wait three to five but that's generally correct I've heard him say some of this before about teaching the students at Columbia business school the intellectual home and value investing for a long time since Ben Graham Warren Buffett but he's worked there and he tells the students that if you do good valuation work you'll be rewarded by the market but he doesn't tell you when so he talks about the importance of being patient sometimes they speak patient for a long time talking about momentum working better over the last decade or more but he's being patient he says that the market will recognize as your valuation that's correct in two to three years sometimes three to five and when you think about it how many people in the last say decade or last five years have been willing to wait to kind of get paid to be right three to five years people often impatient they're not willing to wait that long say two three years it's not happening after three years if you stalk that you've chosen isn't doing well how many people are willing to wait up to five years for it to take off or to be paid for that valuation work and now he starts talking about the value opportunity that he sees right now in value investing over the next few years how it's such a great opportunity a very good in fact listen to what he says how do you see the opportunity in value investing right now yeah it's it's it's really just starting yeah this is if you're looking at your screen this is uh the website gotham.com and we just put this up a few days ago and this is sort of giving away over 50 million dollars worth of uh research and construction you know in this and it it's actually telling us where the we think the market is now based on past history this is a chart it's a research portfolio constructed the same way for 30 years and what we're trying to do effectively is look at the 1400 largest stocks and buy a portfolio so that our position weighted averages we have about the least expensive 20 of names that's really what this portfolio uh This research portfolio is designed to do it has seven or eight hundred names but they're not equally weighted they're weighted towards the cheapest one and so it has it's effectively trying to capture the 20 of the cheapest names it's updated daily it's not that the value of business has changed daily but prices do so the relationship between price and value changes daily and it's always skewing towards the cheapest 20 so that graph is showing the average two-year forward return is 61 so he's saying that it's a very good an opportunity and this is in comparison to history they've got data going back to 1990 he thinks it's a very good opportunity it's gone down a little bit since he made this video which is about a week or more week or two oh it's like in the 50s now and because the Market's gone up a bit quite a lot and some for some stocks but still this is the opportunity for the the cheapest 20 of stocks he's talking about good quality stocks not kind of junk as he's they've analyzed them as research teams analyze them so the cheapest 20 you think have got a very good opportunity over the coming years right today what it says is over the last 30 years we're in the 92nd percentile towards you mean the market for the 20 cheaper stocks if you created the same portfolio out of the 1400 largest in the same way and valued stocks in the same way given our research team and everything else for the last 30 years right now we're in the 92nd percentile towards cheap over those 30 years we call it the Gotham yield but it's the free cash flow yield the way we uh constructed but we did it the same way over the last 30 years it's only 14 today meaning we get a 14 free cash flow yield relative to the oil and costly Enterprise value of the business meaning the only cost of buying the stock plus the debt that you assume when you're buying the stock pretty similar to the way a private Equity Firm would invest and so we can construct this very Diversified portfolio of hundreds of names with a position weighted earnings deal you know cash flow yield to 14 we've only been able to do this eight percent of the time over the last 30 years and when we've been here the two-year forward return has averaged possibly 61 percent beginning scissors for this portfolio of hundreds of names then they look at hundreds not just a focused few like some value investors in like he used to do but he says it's in the 92nd percentile towards cheap which is historically a very good forward opportunity 61 as this graph shows it when he showed it then at that time a very good opportunity for Value investors for or for his particular folio if you're getting value out of this episode so far and watching on YouTube please hit that like button to help with the algorithm to spread its more people to give you an idea how that compares to the s p the S P's constructed the same way according to our metrics and the 28th percentile towards expensive and when it's been here in the past two year forward returns have averaged 17 sub normal but not negative so you know 61 for the value opportunity the way we constructed at 17 for the s p and that's not a prediction that's saying when we've been able to construct these portfolios before this is what's happened over the next two years so importantly he Compares it to the S P 500 Index doing it the same way he says that it's in the 28th percentile towards expensive in comparison to that value opportunity and that means the Ford returns are about 17 rather than that 61 or now in the in the late 50s so quite a big disparity between value and the S P 500 Index as a whole so the opportunity looks good to him and this is one of the greatest invests of all time so he's worth listening to about this I think just my opinion and my answer to those who say you know things don't look so good right now the FED is raising rates we're about to hit a recession of course you're able to construct a portfolio that's fair fairly cheap and I would say every time over the last 30 years we've been in the 92nd percentile it's looked at least this bad so it always looks bad when you're able to buy them this cheap so he answers this question about the macro saying that things look so bad of course you can buy stocks cheap and he says that whenever in the past it's been in the 92nd percentile like this it's always look bad at the economy or the macro situation has always looked bad so that's a part of value investing going when the house is burning down and by then when everybody else is running away so he's saying that the macro economy looks bad it always looks bad like in 2009 and then the market Bottoms in the economy looked terrible things looked terrible he's saying that it says the opportunity is good it's not a reason to hold back from buying cheap stocks and that 20 percentage of cheapest good quality stocks anyway I'm very excited about the value opportunities my bottom line there's a huge dichotomy I'm not saying it's like you know what happened to us in 98.99 where we're losing money everybody's making money and then in 2000 you don't reverse completely but I am saying it does right I'm saying there's a huge dichotomy between the way we perceive value and what the market is is paying for so next he gets a caveat about it getting cheaper saying just because it's in the 92nd percentile towards cheap doesn't mean it can't get a lot cheaper still gives the example of March 2009 that cheapest part of the market and the last Big Bear Market in the global financial crisis got to the hundredth percentile so just because it's in the 90 second there could be another big washout it could get really really cheap so you could go in and buy and it could get cheaper so you've got to be prepared for that he's prepared for that and it could happen uh if I were investing in the stock market value was an amazing opportunity right now you know uh 92nd percent off but let me give you a caveat that is saying that on March 2nd 2009 our Gotham yield which is now 14 got to 24 so that's the difference between 92nd percentile and 100 percentile that's the cheapest ever got okay the two-year Ford returned from there was 178 so you probably shouldn't be making 90 a year you know the pendulum of the market got very cheap and all I'm saying is the distance between the 92nd and the 99th or 100th percentile is huge and you would be losing you know another 30 40 now the market the pendulum when it got there of course you made 178 over the next two years so for me telling you that we're in the 92nd percentile on the average return over the next two years from our research based on our research is 61 percent if you can close your eyes for two years on average that's what's going to happen that doesn't mean it's not going to fall 30 from here and that is the rub and that's the great news for people like us the last man standing will be time Arbitrage meaning patience and patience isn't short supply because everyone is looking to make money in the next year or two and I'm just being patient uh you know I said God you know our strategy at Gotham is to be patient just value the companies you know where it's going to be trading two three four five years out just take a little longer Horizon than other people and I'm not saying it won't fall 20 or 30 from here if Market wants to go even more crazy uh on the downside I'm saying you know historically over the next couple of years uh you know if you constructed a diversified portfolio of our definition of value uh at least based on past history we have a great opportunity set and you know uh we're excited about it that's all you guys is as excited about the coming value opportunity more than it has been for a long time so in this interview here also talked about a couple of the books that he's written really good books I've read them and the excellent I'm going to relieve a referral Link in the description thanks very much if you use those I get a little bit of commission on that from Amazon my first book was you could be a stock market genius not you too can be a stock mortgages that would be conceded but everyone calls it down stock market genius in 1997 and that was about uh valued special situation investing I wrote a book called the little book that beats the market in 2005 the little book that still beats the market came out in 2010.
I also wrote a book called the big secret for the small investor that uh no one bought and uh I wrote another book in 2020. um so still make the market came out a while ago and it just updated the data from uh the first book uh it talked about some of the the further research that we did you can be a stock market genius is aimed kind of at a master's living student he realized that and the books are kind of progressively aimed at sort of more beginner investors to help with some of the concepts and value and how to get paid by the market they're really worth reading so I'm going to leave that link for you so if you've got this far in the video maybe consider subscribing on YouTube if you're watching on YouTube or in your favorite podcast app and I'll see you again thanks for listening or watching
Comments 0