Monday, June 25, 2012

Joel Greenblatt quote (6% minimum return)

“I always assume that my minimum bogie is at least a 6 percent return, even if interest rates are near zero, as they are now. Moreover, I have to beat 6 percent by a measurable amount because the assumption is that the 6 percent is risk-free. So I wouldn’t take 8 percent, unless I have high confidence that it will grow over time. I need a “margin of safety,” as Graham would say. I compare normalized earnings to the risk-free rate or 6 percent, whichever is higher.” –Joel Greenblatt (as quoted in the book Hedge Fund Market Wizards)