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Joel Greenblatt on Investing Today

April 21, 2011
Joel Greenblatt, Gotham Capital, offers "big tips" for small investors.

Greenblatt thinks the large cap stocks are 80 percentile cheap and smaller cap are about 50 percentile cheap, based on trailing earnings. By “cheap”, he means the stocks are positioned to offer 6 to 8 percent return per year.

He said in the current environment, he can still find a lot of value stocks.

Rating: 2.7/5 (3 votes)


Dwiprut - 5 years ago

It wasn't clear to me what he meant by this "80 percentile cheap...". That 80% of the large caps are still cheap? Was he saying large caps are cheaper than small caps, or the opposite?

Does anyone have an idea based on this or other comments he has made recently?
Jb85 - 5 years ago
dwiprut - If you were to plot lets say the P/E ratio for large stocks every month for the past 23 years (his data set), then the current P/E ratio would be cheaper than 80% of those in the data set.

He is also saying that large cap stocks are cheaper than small cap stocks now.

forecasts by grantham also suggest this - that returns for small cap stocks will be low in the coming years, and that large cap stocks will perform better
Cm1750 - 5 years ago
According to GMO, small caps will have a -0.3% nominal IRR over the next 7 years while quality stocks (mostly large blue chips) will have a 7.1% nominal IRR.

Grantham said in an interview that he personally thinks the difference will be even larger.

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