This is a Guest Post by AK of Fallible
AK has been an analyst at long/short equity investment firms, global macro funds, and corporate economics departments. He co-founded Macro Ops and is the host of Fallible.

In this video we’re going to talk about how you can use big picture thinking to beat the market. And we’re going to do it with the help of the famous value investor Joel Greenblatt.

If you don’t know Greenblatt, he wrote the book called “The Little Book That Beats The Market” which included his famous “magic formula” used in value investing. He also created the website Value Investing Club and is a professor at Columbia’s business school.

In his classes at Columbia Joel would say that he’s only average at valuation work. He has little edge there. Where he excelled, and where is edge really came from, is in putting all that information into context. He could see the bigger picture and pinpoint what matters.

Here’s a quote from him:

“Explain the big picture. Your predecessors (MBAs) failed over a long period of time. It has nothing to do about their ability to do a spreadsheet. It has more to do with the big picture. I focus on the big picture. Think of the logic, not just the formula.”

This is so important. You need to focus on what’s important when it comes to investing. Don’t focus so hard on stupid details that you end up missing the forest for the trees.

This is an issue for a lot of new traders. They come out of school learning how to use Excel and get so excited with their spreadsheets that spit out random valuation numbers. Do those calculations actually help them make money? Probably not. But they focus all their time on those minute details anyway.

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***All content, opinions, and commentary by Fallible is intended for general information and educational purposes only, NOT INVESTMENT ADVICE.