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In the following video, Joel Greenblatt, author of one of my favorite investing books “You Can Be a Stock Market Genius,” opines on Hedge Funds, passive investing and current stock market valuations. Specifically, he says stocks are currently trading in the 90th percentile in terms of cheapness (90% of the time they have been more expensive than today) and returns going forward should be very attractive.

Hat tip, Abnormal Returns


This chart from Crossing Wall Street is a great visual accompaniment for Greenblatt’s valuation argument. Stocks just aren’t keeping up with earnings lately.