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The Essential P/E: Understanding the stock market through the price-earnings ratio by Keith Anderson

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Chapter 16. Joel Greenblatt: The P/E and Return on Capital

Joel Greenblatt is an American money manager. He started out emulating Benjamin Graham by setting up a partnership, Gotham Capital, in 1985. Gotham Capital invests in value shares and special situations such as mergers, spin-offs and bankruptcies. Greenblatt is also a professor on the adjunct faculty [10] at Columbia Business School, where Graham taught. He is very successful, having achieved annualised returns of 40% at Gotham from 1985 to 2005.

The Little Book that Beats the Market codifies his approach to value investing and has turned out to be an investment bestseller. Greenblatt’s little book is not only minimalist in terms of its size (136 pages plus an appendix), but advocates ...

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