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.