How does Earnings Yield and ROE affect Stock Returns

January 10, 2017

In Joel Greenblatt’s book, “The Little Book That Beats The Market”, he writes that one could get better than market returns by “buying good companies (ones that have a high return on capital) and ” … “only at bargain prices (at prices that give you a high earnings yield)”. I would like to explore that concept for different time periods (e.g. years, months, etc), and different markets (e.g. expansions, recessions).

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