Greenblat strategy.  buy 20 - 30 stocks that meet his criteria every year.  This strategy will not work every year, but overall the long term, it will generate about 15 - 20% return

1. Pre-tax earnings yield => 1/ (EV / EBIT) > 20%
2.  Pre-tax ROC = EBIT / tangible capital employed > 100% => TCE = tangible fixed assets + inventories & receivables - non-interest bearing liabilities
3. Invest in companies > certain market cap

Long Term Eval

Fundemental Stuff

1. Brand
2. Market Cap (market value) vs. Enterprise Value [EV] (price to purchase business) => look for less than $8B
3. EV / FCF < 10 (FCF = free cash flow / share [cash available for distribution], LCFC (cash available to stockholders after interest payments)
4. Historical vs projected growth (use the more conservative estimate)
5. EV / FCF / G < 1.0 (normally priced is about 1.5)
6. EV / FCF / ROE < 1.0 (1.5 is bad)
7. Shareholder dilution (<3% if rest all the above is good)
8. EV / EBITDA = # of years for investment to pay for itself. (same as #3)

TPC

• S&P Index and jobless claims have a very high correlation.
   

FT

• ZIP - zipcar IPO at $18, but traded to $28 ($1.1B MC).  IPO proceeds of $170M
• Founded in 2000, and allows members to book short rentals via the web or phone for cars it owns and parks in public garages
• Largest Markets in Boston, Washington, NY, SF, London.  Only in 14 metro areas
• Has yet to turn yearly profit (Rev = $186M, OpEx $193M, $8.3M interest, $137M Debt)
• IPO proceeds will be used to pay off debt
• When GDP / capita gets between $13k - $18k (median $15k) growth slows down an average of 2% because the easy and fastest phase of growth lasts as long as unskilled workers can be hooked into a rudimentary industrial economy.  The next phase involves less dramatic changes in industrial productivity and a shift towards less productive service businesses.  China is about 4 years away from reaching the average tipping point.

Barry Knapp - head of US equity portfolio strategy at Barclays article

• 3 drivers for equities and sectors - business cycle, valuation, and fundamentals
  
  • When you are at the stage of the business cycle, where economy is improving and Federal Reserve policy is still accommodating, you would probably give the business cycle roughly a 75% weighting in your model.  That is really the key to to how the equity market does this year.
  • Whenever the ISM falls from 60 to 50, a natural progression in the business cycle, things like margin expansion and analysts' earnings estimates are decelerating, but margins and earnings aren't declining.
  • Philly Fed has a measure of economic-forecast dispersions going back to 1968, if you line that up w/ SPX earnings yield, it maps pretty well and it might overstate importance of business cycle on equity-market valuations.  However, during periods of PE multiple expansions, there were also long business cycles (9 - 10yrs).
•  Stock market valuation EY = 7%, 10-year T-Bond real yield (rate - inflation) is 1%.  Spread of 6% is highest we've seen since early 1980s
• SP500 earnings forecasts & margins
  
• Currently at $93 / share.  Margins typically peak 6 - 9 months before a recession.  Expecting about .4% margin expansion.
• SPX forecasting 5.5% revenue growth => roughly nominal GDP plus 100 basis points from greater % of foreign sales this cycle, strong international growth relative to domestic growth.  Add 40 basis points of margin improvement, and that gives you 11% earnings growth yoy
• Unemployment - in 1983 it fell from 10.8% to 8.3% in a year, but didn't go below 7% for 3 more years.  We may drop below 8% by the end of the year, but then it could take 3 more years to go below 7%
• Sectors - buy cyclicals and avoid defensive sectors.  that goes back to the same dynamic about business cycle being more important than valuation or even fundamentals at this stage.  You should be in cyclicals up to the point when the Fed starts normalizing policy.  Then, valuation becomes more important (ie: heavier weighting your model)
• Small caps - in this sweet spot of the business cycle, small always outperform large.  That was true in 80s, 90s and past decade.  How they do after the Fed normalizes policy has a lot to do with relative valuations.  90s and 2000s, they outperformed because they were cheaply valued.  This time, they are richly valued, so once we get Fed normalizing policy and beginning to drain liquidity, valuation will be important.
• Energy and industrials are at the top of our list, because they are sdtill getting margin expansion.  They are late-stage cyclical sectors, and that is what works best at this stage.  Financials and tech should work reasonably well.
• Financials - dividends / buybacks were a sideshow.  The real story is $1.3T - $1.8T in excess cash in the banking system.  Once banks increase risk tolerance and start to put that money to work in securities and loan portfolios, all of a sudden you have a strong revenue outlook for teh sector.  ROE can go to 12% from 9%, then banks belong at 1.5 BV not 1.1BV
• Fed policy 
• they will stop expanding in June, but keep balance sheet stable through Sep or Nov
• if data is strong at that time, it will likely trigger a typical equity-market correction that you get when Fed begins to normalize policy, it will probably cause an 8 - 10% correction.
• Housing - we just need housing to be not negative so it doesn't' create a big negative-wealth effect.  The only way we can do that is if a bunch of shadow inventory owned by the banks/Fannie Mae / Freddie Mac comes to the market all at once.