Hedge fund guru Joel Greenblatt says that he thinks the best values in the stock market are probably now in the “high-quality” area, as opposed to the junk stocks that have led the recent rally. And, he says he’s not too concerned with potential inflation — or deflation, for that matter.

Greenblatt, who uses a purely quantitative formula to pick stocks, tells Yahoo! TechTicker that he doesn’t like to predict where the broader market will go. But he does say that stocks with poor fundamentals got hammered last fall and in the early part of 2009, and have then surged back during the rally. Higher-quality stocks, meanwhile, fell less during the plunge, and have risen less in the rebound. “A lot of those are available at attractive prices,” he says of the latter group.

Greenblatt’s two-step “magic formula” is a value approach that often delves into unloved areas. “What you’ll find is that [the formula] comes up with companies that people always think there’s a problem with,” he says. Investing in one or two of these firms is thus risky. But if you buy a broader portfolio of them, the risk is dispersed. “That’s why you really have to buy a basket of 20 or 30,” says Greenblatt

Currently, Greenblatt says his strategy is finding value in construction & engineering and retail stocks. It’s also high on McGraw-Hill.

Greenblatt also offers an interesting take on macro-economic assessments. Because of its long-term nature — he says long-term investing is three to five years and “hopefully ten” — he says his strategy doesn’t look at macro factors. Over longer periods, economic problems “play themselves out”, he explained. And, he says stocks can generate strong gains in a variety of climates. During inflationary periods, for example, they offer great protection, he says, but good companies also aren’t bad places to be during deflationary climates.