Goodreads helps you keep track of books you want to read.
Start by marking “The Little Book That Beats the Market” as Want to Read:
The Little Book That Beats the Market
Enlarge cover
Rate this book
Clear rating
Open Preview

The Little Book That Beats the Market

3.97  ·  Rating details ·  5,270 ratings  ·  340 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 prov ...more
Hardcover, 155 pages
Published November 28th 2005 by John Wiley & Sons (first published December 31st 1999)
More Details... Edit Details

Friend Reviews

To see what your friends thought of this book, please sign up.

Reader Q&A

To ask other readers questions about The Little Book That Beats the Market, please sign up.
Popular Answered Questions
Justin Availability of financial data differs in different countries. Accounting reporting standards also differ. This makes the data less reliable to build …moreAvailability of financial data differs in different countries. Accounting reporting standards also differ. This makes the data less reliable to build a strategy on. However accounting standards are becoming more global these days as companies move to international standards, so foreign company data is becoming more reliable.(less)

Community Reviews

Showing 1-30
Average rating 3.97  · 
Rating details
 ·  5,270 ratings  ·  340 reviews

More filters
Sort order
Start your review of The Little Book That Beats the Market
Aug 10, 2014 rated it it was ok
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.
Apr 26, 2013 rated it it was amazing
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".

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
Oct 25, 2019 rated it really liked it
Shelves: waiting
Quite interesting, written as simple as possible, not sure how good the formula would be tho.
Erik Blanco
Apr 07, 2020 rated it it was amazing
As a person with a degree in Finance, working in the industry, and with an advanced financial certification, this book was useful to oversimplify concepts of picking individual stocks. It's a good read and would recommend to all ages. Wish I would've read it sooner rather than later.
Jan 15, 2013 rated it it was amazing
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
Jul 18, 2011 rated it really liked it
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
Ajinkya Jadhav
Aug 15, 2020 rated it liked it
Decent read. Beats a bit around the bush when it really has only few concepts (very solid ones though) to offer.
Would be a better read for someone in early 20s just starting out their investing journey.
Merdan Tekayev
Feb 18, 2017 rated it really liked it
Great book about investing supported by facts(didn't check it myself though).It concentrates on the two main factors of businesses( earning yield and return on capital) which could be an accurate indicators of its success or failure. Author illustrates what could be the best number of stocks in ones portfolio, gives step-by-step guidance and so on! Overall "straight-to-the-point" kind of book!
Todd Wood
Jun 19, 2015 rated it really liked it
While a very simple and straightforward book, the concepts are actually very powerful and important. It is written in a way to be accessible to non-finance people, and offers a good explanation as to why certain companies outperform others. Most simplistically, you want to buy companies with above average earnings growth for below average prices... duh. But a nice reminder, and probably would be a good read for the average person. I knocked a star off due to the fact that calling this the "magic ...more
Pulkit Goel
Jul 11, 2015 rated it really liked it
This is a great book to get the most basic concept in investing straightened out. Being not from a finance background, as most people are, the investment jargon gets too heavy on a person who has a slight intersest in it, leave alone the art which is being played behind the scene. This book provides these basic concepts in a very elegant way.
However, this book has heavily stressed out the use of 'magic formula' throughout, which might not present the complete picture to the reader. Thus, advisab
J. Sebastian
Jul 08, 2017 rated it liked it
Shelves: finance
This was a good book for me to read because it describes an important method for the valuation of companies and for making smart investments; this is usually a difficult subject that fills people with anxiety or puts them to sleep, but Greenblatt has written in a light and easy manner, with generous humour, and in such simple language that it removes anxiety, encourages the reader, and gets him excited to learn more, pick the right stocks, and give it a start. The book is easy to follow and unde ...more
Soon Mi
Of course his magic formula works retrospectively, every shot is a bulls eye if you draw the circles after you shoot... the book is pretty easy to read, which I appreciate as someone who’s still in the beginning stages of learning about the stock market. However, I feel dubious about the content and feel like he’s just a salesman. I’ll have to do some more personal research.
Jun 23, 2018 rated it it was ok
Good but essentially a value investing white paper stretched to book-length.
Eileen reisin
Oct 03, 2018 rated it it was amazing
Fucking tiptop. A 12-year-old could get this read and understood over a Sunday afternoon. Would recommend.
Gowtham Injamuri
Apr 25, 2020 rated it it was amazing
Amazing narrative of a framework for investing. Very detailed in a manner that can be understood by teenagers. This reminded me that I could've read this at least 6 years ago😂😂
Aug 24, 2019 rated it really liked it
Meant for people who really want to automate all of their investments. Some of these companies have an irreversible path to destruction that can destroy a portfolio, but some stocks in the formula can net 40 percent returns. The main goal is to diversify your portfolio so one company can't destroy it
Sandeep Kumar
Aug 10, 2017 rated it it was amazing
Shelves: re-read, finance
Love the way things are explained. Even if you are not looking to do any investment this book is fun to read.
Anuk Yingrotetarakul
This book provides a good overview of some core value investing principles. The magic formula, a simple tool for filtering stocks based on earnings yield and return on capital, is a good starting point for selecting stocks. However, for readers who crave a deeper understanding and richer perspective on value investing may be left disapppointed by the lack of depth.
Manas Saloi
Jul 08, 2018 rated it it was amazing
Really good investing framework for beginners but could have been a blog post.
Gabriel Mahl
Jun 30, 2020 rated it it was amazing
Fantastic book!
Aug 09, 2019 rated it it was amazing
Before and after reading this book, I read a lot of reviews, both praising and hating it, but all with the same point in common: simplicity.

Because say one thing about this book, say it is easy to comprehend. But therein lies its greatness. Detractors critizicing it seem to have missed the point or have read it with a different objective. It is not an insightful recipe for wannabe investing gurus, but rather an humorous, humble and simple approach to investing with common sense, both things most
Santosh Patil
Mar 04, 2017 rated it it was amazing
If you are a beginner in the market and need something to start with which is effective as well as easy to understand, pick this book. Whole 'little' book revolves around 'Magic Formula' which tells people to invest in stocks with high earning yield and high return on capital.

Four stars for the book and one more for simplicity and humor with which it is presented.
Dec 01, 2017 rated it liked it
Shelves: nonfiction, 2017
Read this review and others on my blog:

Joel Greenblatt’s The Little Book That Beats the Market is an easy to read financial book that discusses his magical formula for stock market picks. The beauty of this book lies in its simplicity–it’s simple enough for a teenager to understand but useful enough for adults to reread again and again.

This book was recommended to me by a dear friend who’s a bit of a financial guru himself. It’s short but sweet. Greenblatt explains
Feb 09, 2016 rated it really liked it
Shelves: financial
Great little book about the stock market and trading that gives beginners an incite to what the world of stock trading has to offer. Quick read.

It gives one of many methods of investing that on average beats the market averages over most every 3 year period. The "Magic Formula" is indeed magic if one can learn to pick stocks to the same degree as the analytic software they use do.

Quite a humorous and upbeat book. Makes you excited to become a part of the investing world. Gives a few resources at
Elroy Galbraith
Mar 22, 2016 rated it really liked it
As a beginner investor with no real experience, I was looking for a text that would provide me with a sound system for identifying a good stock purchase. I wasn't looking for "get-rich-quick" methods, but sound principles. With references to a "magic formula" it's very easy to feel unsure about Greenblatt's suggestions, especially because it's all in relation to a notoriously insecure arena: the stock market. But his logic seems sound and reliable and just make sense. In fact, while reading this ...more
I read this book in 2012 or thereabouts. Liked it.

Very clear thesis - reversion to the mean.

If you buy out of favor (share price down due to some temporary earnings issue), but good companies ...over time, these companies´share prices will revert back to a normalized P/E ratio, and you will do fine.

I even selectively chose and bought stocks I understood from the magicformulainvesting website...I used the site to give me ideas to investigate.

The general thesis...reversion to the mean...I believe
Feb 27, 2010 rated it liked it
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
Mimi Dang
Jun 21, 2014 rated it liked it
Shelves: market-finance
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
Aug 05, 2014 rated it liked it
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
Jaison Abraham
Apr 24, 2015 rated it really liked it
The author does a good job of taking some important economic concepts around competitive strategy and valuation in investing and making them easy to understand for those not well versed in the industry.

On the downside, I'm always skeptical of "magic" things in investing, and the author nearly guarantees alpha from his strategy. Though the strategy is fundamentally sound, this is dangerous and could drive some to blindly invest in the strategy.

Also, I think the book derives its value from its sim
« previous 1 3 4 5 6 7 8 9 10 11 next »
There are no discussion topics on this book yet. Be the first to start one »

Readers also enjoyed

  • The Dhandho Investor: The Low-Risk Value Method to High Returns
  • The Little Book of Value Investing
  • One Up On Wall Street: How to Use What You Already Know to Make Money in the Market
  • Common Stocks and Uncommon Profits and Other Writings
  • The Little Book That Builds Wealth: The Knockout Formula for Finding Great Investments
  • The Education of a Value Investor: My Transformative Quest for Wealth, Wisdom, and Enlightenment
  • The Most Important Thing: Uncommon Sense for the Thoughtful Investor
  • Beating the Street
  • The Little Book of Valuation: How to Value a Company, Pick a Stock and Profit
  • Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor
  • Value Investing: From Graham to Buffett and Beyond
  • Security Analysis: Principles and Technique
  • The Little Book of Behavioral Investing: How Not to Be Your Own Worst Enemy
  • The Interpretation of Financial Statements: The Classic 1937 Edition
  • The Acquirer's Multiple: How the Billionaire Contrarians of Deep Value Beat the Market
  • Buffettology: The Previously Unexplained Techniques That Have Made Warren Buffett the World's Most Famous Investor
  • Learn to Earn: A Beginner's Guide to the Basics of Investing and Business
  • The Warren Buffett Way: Investment Strategies of the World's Greatest Investor
See similar books…
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.

News & Interviews

  Let your voice be heard! We need your help selecting the best books of the year during the 2020 Goodreads Choice Awards, our 12th annual...
66 likes · 34 comments
“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.” 10 likes
“In short, companies that achieve a high return on capital are likely to have a special advantage of some kind. That special advantage keeps competitors from destroying the ability to earn above-average profits.” 2 likes
More quotes…