>>>Interesting that Joel Greenblatt thinks that the market has only been more undervalued than today 13 percent of the time (page 9). I'd be interested to see his methodology...<<<He explained very clearly how he arrived at it. He used the Russell 1000 Index (which is the largest 1,000 U.S. stocks by market cap). He used the market cap weighted free cash flow yield for each day of the last 20 years. In only 13% of the days has it yielded a higher free cash flow than now. He went on further to say when it has been this cheap it has given a 17% return over the next 12 months and a mid 30's over 2 years. He also said "It’s a very attractive time to invest in the market, despite the run-ups that we’ve seen in the last year."