#1
Focus on Earnings Yield
"Earnings yield (EBIT/Enterprise Value) is a better measure of cheapness than P/E ratio."
Earnings yield is superior to P/E ratio.
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Joel Greenblatt⚖️ Value Assessment
Joel Greenblatt's Value Assessment Rules
Joel Greenblatt (born December 13, 1957) is an American investor, hedge fund manager, and author. He is the founder of Gotham Capital, which achieved annualized returns of approximately 40% from 1985 to 2006, and is a professor at Columbia Business School. Greenblatt is best known for developing the "Magic Formula" investing strategy, a systematic approach that ranks stocks based on...
3 principles·Value Assessment
3 Key Value Assessment Principles
#2
Value Discipline
"Never overpay for a security, no matter how exciting the story. The price you pay determines your return. Discipline in valuation is the foundation of investment success."
Discipline in valuation determines investment success.
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Focus on Intrinsic Value
"Always estimate the intrinsic value of a business before investing. Compare price to value, not price to past price. The gap between price and value is where profits are made."
Compare price to intrinsic value, not to past prices.
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What are Joel Greenblatt's key value assessment principles?
Joel Greenblatt has 3 key principles on value assessment. The most important one is "Focus on Earnings Yield" — Earnings yield (EBIT/Enterprise Value) is a better measure of cheapness than P/E ratio.
How does Joel Greenblatt apply value assessment in practice?
Joel Greenblatt applies value assessment through several key principles including "Focus on Earnings Yield" and "Value Discipline". These principles guide practical investment decisions and have been tested across decades of market cycles.
What makes Joel Greenblatt's approach to value assessment unique?
Joel Greenblatt's approach to value assessment is distinguished by a focus on long-term thinking and fundamental analysis. With 3 specific principles in this area, Joel Greenblatt provides a comprehensive framework that investors at any level can study and apply to improve their decision-making.
