The Little Book That Still Beats the Market

The Little Book That Still Beats the Market

Your Safe Haven in Good Times or Bad

Book - 2010
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WILEY
In 2005, Joel Greenblatt published a book that is alreadyconsidered one of the classics of finance literature. In TheLittle Book that Beats the Market—a New York Timesbestseller with 300,000 copies in printGreenblattexplained how investors can outperform the popular market averagesby simply and systematically applying a formula that seeks out goodbusinesses when they are available at bargain prices. Now, with anew Introduction and Afterword for 2010, The Little Book thatStill Beats the Market updates and expands upon the researchfindings from the original book. Included are data and analysiscovering the recent financial crisis and model performance throughthe end of 2009. In a straightforward and accessible style, thebook explores the basic principles of successful stock marketinvesting and then reveals the author’s time-tested formulathat makes buying above average companies at below average pricesautomatic. Though the formula has been extensively tested and is abreakthrough in the academic and professional world, Greenblattexplains it using 6th grade math, plain language andhumor. He shows how to use his method to beat both the market andprofessional managers by a wide margin. You’ll also learn whysuccess eludes almost all individual and professional investors,and why the formula will continue to work even after everyone“knows” it.

While the formula may be simple, understanding why the formulaworks is the true key to success for investors. The book will takereaders on a step-by-step journey so that they can learn theprinciples of value investing in a way that will provide them witha long term strategy that they can understand and stick withthrough both good and bad periods for the stock market.

As the Wall Street Journal stated about the originaledition, “Mr. Greenblatt…says his goal was to provideadvice that, while sophisticated, could be understood and followedby his five children, ages 6 to 15. They are in luck. His‘Little Book’ is one of the best, clearest guides tovalue investing out there.”



Alert
Using entertaining anecdotes to drive home his points, the author expands on the successful investing strategy from his original best-seller, offering a time-tested "magic formula" for profiting in any market.

Baker
& Taylor

A hedge fund manager and Columbia Business School professor shows how "beating the market" can be made simple and easy for investors of any age, updated by an afterword covering the recent financial crisis.
The author expands on his successful investing strategy to offer a time-tested "magic formula" for profiting in any market.

Publisher: Hoboken, N.J. : Wiley ; Chichester : John Wiley [distributor], 2010
Edition: 2nd ed
ISBN: 9780470624159
0470624159
Characteristics: 183 p. ; 19 cm

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OL_539
Dec 30, 2018

A good introduction to the world of investment in the first chapters.
A basic concept of buying undervalued stocks is fine. But make sure you are not buying a dwindling down company.
Make sure you check Financial statements in places like https://finance.yahoo.com
for Net Income and Gross Income. Both have to be positive and growing or soon to be growing for cyclical companies.
Check both yearly and quarterly statements.
If last year Net income smaller than previous, read about the company and see if there is a potential come back. If yes, buy it, otherwise, don't.
Watch for the companies that are down on earning in the last one or two quarterly statements, but have the potential to grow in the near future.
Summary: I would never buy a stock just because it's on a good sale (magic formula) unless the above mentioned financial statements are quickly checked as well.
The author himself mentions that in the last chapters.
The idea of Cost of Revenue be smaller than Gross Profit is good though.
My biggest problem is that the author is suggesting to rely on 'magic formula' only for most of the people.

j
joekirwin
Jan 13, 2015

A useful introduction to investing. Although it is a struggle to be confident in MFI investing as a sole strategy, it can be useful as a primary stock screening tool.

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