The Little Book That Beats the Market
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The Little Book That Beats the Market

3.77 of 5 stars 3.77  ·  rating details  ·  1,083 ratings  ·  98 reviews
Two years in MBA school won't teach you how to double the market's return. Two hours with "The Little Book That Beats the Market" will.In "The Little Book," Joel Greenblatt, Founder and Managing Partner at Gotham Capital (with average annualized returns of 40% for over 20 years), does more than simply set out the basic principles for successful stock market investing. He p...more
ebook, 176 pages
Published June 3rd 2010 by John Wiley & Sons (first published November 19th 2005)
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Jon
This is just fantastic. In his little book which is part of a larger series on investing, Greenblatt humourously ivites us to a time tested fairly simple investing strategy called the "Magic Formula". http://www.magicformulainvesting.com/

In essence it is value investing by looking at the earning yield (not dividend yield!)and the return on assets (ROA).

I find Greenblatt to be a fantastic and amusing mentor that describes finance in a very simple and thorough manner. The introduction should be ob...more
Matt
Being interested in finance at an early age is pretty difficult for me because of all of the complex terminology and concepts. My brother, who is in finance, suggested this for me because it is easy to understand. He was completely right, Greenblat was able to explain market analysis so well a 10 year old could go out tomorrow and be able to choose stocks well. He used interesting metaphors with his kids and their candy business as if they were a multi-million dollar company. After reading this...more
Saugat Banerjee
The advice given in the book about the 'magic formula' sounds good and the author backs it up with past 17 years of results. Its about picking 20-30 stocks with high Return on Capital and available in bargain prices. Its a quite unique way of investing as you need to keep selling the stocks around one year mark and then buy new ones with the magic formula. His website is free to find the stocks out using the 'magic formula'. But, its like a process which needs time and patience (and ofcourse mon...more
Paul
I have 30 years trading experience in the stock market and am always looking for new angles to improve my skills and profits.
I found that even though the principles presented in this book are not new that I enjoyed reading the book because of the clear and concise manner the information was presented. The principles described in the book are explained very simply and well. The website is well worth utilizing to save the time in screening the stocks yourself. Most casual investors will not want t...more
Hellkitten
Great book. Even if you don't want to follow Greenblatt's plan, this is a good book to read to get you thinking about the stock market and the economy. Just a good read. You'll enjoy it, if nothing else.
Danm
Decent investing book, but couldn't really get into it. These stats can be skewed in so many different ways that you can make them look ugly, decent, or pretty. IMO, the key to successful investing is choosing high-quality companies that consistently increase their cash flow, revenue, net income, and comps (if a retailer) while keeping the balance sheet at least relatively clean. Industry trends also play a BIG role. Additionally, any book that uses the word "formula" should be approached with c...more
Khairul Bashar
The book seems to be a good starting point when it comes to value investing, really easy to read and easy to grasp the concepts. The writer has been successful in capturing readers' attention throughout.

This book has stated a “Magic Formula” of high yielding investment. The formula is indeed so simple that even a naive/amateur investor can generate alpha. Joel Greenblatt asked the investors to judge stocks by using only two parameters:

1. High Earnings Yield (Earnings yield is the reciprocal of P...more
Catherine
What a fun little book! Addressed to a 12-year old, it makes market analysis and investing seem actually understandable. I'm only half-way through but I feel I've already learned a great deal. A friend lent it to me, and it was given to her by a wealthy couple who are nearby neighbors. If you want to explain investing to your teenagers or college students, this is a great book.

The moral of the story is that buying stocks that have a high return on capital investment (in other words if you can s...more
Rob
The most endearing trait of this book is that it is short. After all, who really wants to spend hours reading a book on investing? This book is very simple and contains a purported "magic formula" on how to beat the market. While I'm skeptical of the simplicity, it does make logical sense and the author does a fair job of backing up his claims. However, this book came out in 2006 and the author claims you need a min of 3 years of following the "formula" to reap the benefits, so it's not exactly...more
John Barbour
I am presently listening through this one on CD. This is the third time I've done it. It's just one of those books. It's entertaining and it takes a couple times through it to really grasp the concepts. It's really about value investing - buying good companies at a discount price with a good margin of safety. But the catch is; How do you know what a company is worth and what's a good price? That's where this book comes in. It helps you learn how to figure this out and does so in an entertaining...more
Mountainking
An excellent 'Explain like I'm five years old' introduction to value investing in stocks. Let us face it, most of the material relating to Investing is noise. Be it Mutual Funds, Indexing, Asset Allocation, Market Efficiency, Dollar Cost Averaging and what have you.. Indexing works if you're going to live for over 100 years. Bad idea.

Really fluid and engaging writing style, a breath of fresh air amidst all the so called experts littering their books with statistics and graphs. Most are gulity of...more
Yuval
It's a nice little book, I liked the way he explained everything slowly and with a great deal of humour.
As for the "magic formula" - I'm not entirely convinced. 17 years of data is not enough time to make far-reaching statements as he does. If finding data older than that is a challenge, I would at least look at other stock exchanges in the world and test the formula there. For example, I would very much be interested to see how it would do in the Tokyo stock exchange in the last 30 years or so...more
Purva Brown
I had tried to read this book back when we were initially considering stock investing and it made little sense. Now it makes a little more but that's only because I KNOW more about stocks and what I have learned has NOT come from this book. Its flippant tone and the attempt to dumb down information does more harm than good in that it confuses me rather than invite me to learn more. There are other better ways to learn about value investing.
Lain
It's difficult to rate an investment advice book without actually taking the advice and seeing how successful it is. What I can say about this small tome is:
-It's written in a very straightforward, accessible manner
-It contains some very goofy, dorky humor that, while making me groan, also made me appreciate the author more
-Its underlying premises seem quite logical and sound
-I plan on taking the advice provided.

One thing I was especially happy to see was that when I went to the associated...more
Marko
This is a book where the writer tries to sell in a concept in a funny and easy way. But it isn't funny and he seems to think that the reader is stupid.
The method of picking stocks might work, but the writer could have explained it in one page instead. He doesn't need to sell in the method on 95% of the pages of the book.
Matt Burgess
The Little Book that Beats the Market (2005), Joel Greenblatt

The Little Book that Beats the Market is a wonderful book. Although I can't validate the promise of Joel Greenblatt's "Magic Formula", his clear and concise outline of investing is insightful for novice to mediocre investors. Throughout the book I was taken back by Greenblatt's casual language, but in the end it convinced me that the strategies found within did not smell of a gimmick. As I enjoyed each chapter I was waiting for the "sa...more
Marcus
This is a solid investment book which describes an investment strategy which is very similar to what I employ for the clients of the portfolios I manage. It is written for the non-financial professional, but all could learn from this simple, but powerful concept. Basic concept is to buy good businesses at attractive valuations. Unlike most investment books, however, it actually tells you how to identify a good business and what an attractive valuation is. It also does not promise this strategy w...more
Aaron
With a little bit of money coming to me in the next few months, my dad suggested I invest part of it and gave me this book as a guide (he has a PhD in economics, so I figure he must half know what he's talking about). It presents an easy-to-follow formula for investing wisely and makes a good argument for it. I am mentally challenged when it comes to this sort of thing, so I appreciate the simplicity of the book. It's a breeze to read through, easily managed in a few hours, and it's written in l...more
May
This book was suggested by a colleague. This book could be good for the occassional investor who requires some sort of methodology. For highly concentrated portfolios, this book might also be helpful. For those in quant finance, not so much. These factors are generally considered risk tilts (i.e. value tiit).



Quant finance would also tend to pick more securities than the fairly concentrated 10-30 securities suggested in the book. At 10-30 securities, you need to be a little more sure of the name...more
Evandro Zanutto
Interessante para conhecimento, um método que tenta se aproximar um pouco do Valuation de Warren Buffet, mas sem o refinamento deste.
Josh Crews
As a financial genius, I add my testimony that this book actually creates better returns than the stock market.

It brings value investing down to the 7th grade level, and then turns it into a reliable formula.

The catch is that it takes true discipline to follow the formula. If everyone had such discipline, then the returns from the method/formula might dry up. But most investors, and by most I don't just mean the average guy but the billion-dollar institutional investor, don't have the disciplin...more
Iren Zweig
Libro económico que te hace perder el miedo a la bolsa y verlo de una manera sencilla y coherente.

Leído Octubre 2013. Español
Ca Mcgowan
Kind of hard to evaluate this book - ask me in 10 years, when we see if his market strategies work or not.
J Sha
the magic formula = high return on capital + high earnings yield
Brandon Little
Jan 23, 2008 Brandon Little rated it 5 of 5 stars  ·  review of another edition
Recommends it for: investors,
The book isnt a typical dry and boring read as many investment books tend to be. Joel Greenblatt is an entertaining and clear writer. The ideas are easy to understand and his methods are backed up with market data. If you are someone that doesnt particularly enjoy the homework part of investing stocks, but still wants to make money in the market, then this book and its strategy would be a must read for you. Even if you turn out to not like or agree with the book, it is such a quick read (I finis...more
Bee
This is a book everyone who's ever thought they could make a buck trading stocks should read. It's an easy read, written in a style that a 12 year old should be able to understand. As such the author can come across as a bit annoying after a while. He tries quite hard to be funny. Despite all that he does a pretty good job summarizing and justifying the concept of value investing. Finally, he actually provides some simple tools to help you effect an value investment plan. Hopefully we'll all qui...more
Bryce Cropper
Nice simple explanation of the stock market. He wrote it with his kids as an audience. Even my 11 year old could understand the concepts (probably even my 7 year old -- but he's pretty smart)! However, I don't think they would care two hoots about it yet. He also presents a "magic formula", which sounds kind of creepy, but makes some sense. Unless you have a pretty substantial amount to invest (I don't). He has you trading 20-30 stocks once per year, I suspect that the amount you'd spend on trad...more
Michelle
Easy and quick to read (written so junior high kids can understand it). Mostly pleasant persuasive piece. Tells you about a "magic formula" to successfully select stocks. Sounds good, but I am no judge of stock market stuff. This is the first stock book I have ever read. I would recommend reading it, especially for ignoramuses like me. It took about two seconds of my life, and explained terms like "return on capital" that I did not know. So even you don't believe the "magic formula", it is still...more
Johan
The book contains a simple yet powerful message. It does not want to tell you about many ways how to approach investing, just about one way do do it. And it is said to work. Not immediately perhaps, but ultimately.
I found out that there is a website on the magic formula that lists the stock that are picked using the criteria described in the book. That was news for me. I tried it out. It works for me. That is not a bad outcome of reading such a simple little book. I guess I am a fan now of this...more
Mimi
9/12/2014: I didn't like the book as much as expected. The information provided wasn't anything new, nor did the author contribute any additional insightful perspective into the matter. The content could have been condensed into half a page or even less. This is not a novel so all the nonsensical descriptions of the Gum Shops could have been omitted as the analogies they provided didn't create a clearer understanding of this so called "formula". I would have preferred a less superficial approach...more
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Joel Greenblatt is an American hedge fund manager and founder of Gotham Capital. He is also an academic and a writer. He is also an adjunct professor at the Columbia University Graduate School of Business. He is the former chairman of the board of Alliant Techsystems and founder of the New York Securities Auction Corporation.
More about Joel Greenblatt...
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“Choosing individual stocks without any idea of what you're looking for is like running through a dynamite factory with a burning match. You may live, but you're still an idiot.” 0 likes
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