Bruce Greenwald Interview on Benjamin Graham and Value Investing

I found a recent video interview with guru value investor Bruce Greenwald. Bruce Greenwald is interviewed by an Financial Times Reporter on value investing. Bruce Greenwald is one of my favorite value gurus. He is the author of Value Investing: From Graham to Buffett and Beyond which is a superb book on value investing. The book is required reading for guru Joel Greenblatt’s class in Columbia business school. Bruce Greenwald is also a director of research at First Eagle Funds. First Eagle Funds are a family of value funds that have outperformed the market by significantly over a long time frame. Greenwald was described by the NY Times as “a guru to Wall Street’s gurus”.

Greenwald has written a variety of books on economics and investing. In his book Competition Demystified Greenwald describes what makes some companies while others fail. Greenwald has a must read chapter on how Wal-Mart overtook Kmart to become king of retail USA. He also wrote about globalization and trade issues between China and the USA

Below is a video where Bruce Greenwald discusses the importance of balance sheets to investing.

Warrren Buffett recommended taking Bruce Greenwald’s class at Columbia University.

Bruce Greenwald says Benjamin Graham was more right 75 years ago about financial markets than almost anyone in the intervening period. He says Graham said to buy cheap, ugly and boring stocks which convinced many people Graham was crazy. Until people researched his ideas and realized his picks outperform the market by significant margins.

Why do people not buy these stocks if they offer superior returns? Bruce Greenwald says that this lead to the behavioral theory of finance ( I suppose he is referring to investors like David Dreman). There are three reasons to this 1. People like “lottery tickets”, hot stocks like technology. 2. People irrationally shy away from ugly stocks 3. People are way too overconfident.

This third reason leads to reason why people overbuy and oversell stocks. He says the statistical studies and behavioral studies have confirmed Benjamin Graham’s ideas in the past two decades.

Bruce Greenwald states the obvious ( which many investors miss) that on average an investor will earn the market return minus expenses because investors are the market. (John Bogle has pointed this out countless times). Greenwald says that Benjamin Graham understood that, so you had to look in special places to outperform.

Bruce Greenwald says the assets are the most reliable thing to evaluate, followed by current earnings. Future earnings are the hardest to predict and therefore they should be avoided.

Bruce Greenwald states that Warren Buffett’s style is different than Benjamin Graham. However an investment like Coca Cola is good because it is sustainable and is good at reinvesting earnings. Benjamin Graham did not look at these investments, however his followers like Buffett look for things that are ugly and look for things that are known like assets, current earnings, sustainable moats and not try to predict way out into the future.



For anyone who wants to see my new resource page on Bruce Greenwald. It can be found by following this link http://valuewalk.com/resource-page-2/current-value-investors/bruce-greenwald/



My investment ideas have been inspired by many of value investors including Benjamin Graham, Charles Royce, John Neff, Joel Greenblatt, Peter Lynch, Seth Klarman,Martin Whitman and Bruce Greenwald. .I live with my wife and daughter in Monsey, NY. I can be contacted jacobwolinsky(AT)gmail.com and my blog is www.valuewalk.com

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