“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)
