Those unacquainted with the world take pleasure in intimacy with great men; those who are wiser fear the consequences.
HoraceRead
Value investing doesn't always work. The market doesn't always agree with you. Over time, value is roughly the way the market prices stocks, but over the short term, which sometimes can be as long as two or three years, there are periods when it doesn't work. And that is a very good thing. The fact that our value approach doesn't work over periods of time is precisely the reason why it continues to work over the long term.
Interpretation
What this quote means
Value investing may not yield immediate results, but its long-term effectiveness is inherent in its occasional short-term failures.
Joel Greenblatt explains that while value investing might face challenges in the short term, this very characteristic is what allows it to remain effective over the long run. The market does not consistently align with value investors’ perspectives, leading to periods where their strategies seem unsuccessful. However, these fluctuations are essential, as they create opportunities for thoughtful investors and ensure that value investing remains a viable and rewarding strategy over time.
Themes
Value InvestingMarketLong TermShort TermStocks
In practice
Example use cases
A financial seminar discussing investment strategies could use this quote to illustrate the importance of long-term thinking.
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