The Little Book That Beats the Market
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- Type：Epub+TxT+PDF+Mobi
- Create Date：2021-08-20 05:52:17
- Update Date：2025-09-06
- Status：finish
- Author：Joel Greenblatt
- ISBN：0471733067
- Environment：PC/Android/iPhone/iPad/Kindle
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Summary
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 provides a "magic formula" that is easy to use and makes buying good companies at bargain prices automatic。 Though the formula has been extensively tested and is a breakthrough in the academic and professional world， Greenblatt explains it using 6th grade math， plain language and humor。 You'll learn how to use this low risk method to beat the market and professional managers by a wide margin。 You'll also learn how to view the stock market， why success eludes almost all individual and professional investors， and why the formula will continue to work even after everyone "knows" it。
Reviews
Harambe
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The book tries too hard and fails at being funny。 It tells many anecdotes and short stories about things from the author's life that have nothing to do with the book's subject。 The book could have been a lot shorter without the story telling， failed humor and repetitiveness。I found it to be a bit distasteful how the author uses people's greed to sell his "magic formula"， by repeating how much money the reader will earn。Furthermore， I think the book doesn't do a particular good job at proving the The book tries too hard and fails at being funny。 It tells many anecdotes and short stories about things from the author's life that have nothing to do with the book's subject。 The book could have been a lot shorter without the story telling， failed humor and repetitiveness。I found it to be a bit distasteful how the author uses people's greed to sell his "magic formula"， by repeating how much money the reader will earn。Furthermore， I think the book doesn't do a particular good job at proving the success of its author's formula。 During a 17 years time period， he basically just compares his results against the performance of the largest 3500 US companies by market cap。 However， he never gives any example of any company that his formula has selected， and it wouldn't surprise me if it has selected a basket of small cap companies。 But， is it really a big surprise that a set of small cap companies would beat companies such as Apple， Microsoft， Amazon， GE， Facebook， etc （if the comparison would have been done against the largest companies on S&P today）？ I think it would have been more apt to use a small cap index as his performance benchmark， if that's the sort of companies that his algorithm selects。Continuing on the previous point， if he's selecting a set of small cap companies， he needs to also consider the added risk that it entails。 The author explains though that the risk of the companies selected by his algorithm is lower than the one of his benchmark index。 His reason is that his set of companies has had a better annualized return during these 17 years， and that the worst year with his algorithm was better than the worst year of the index。 However， this feels like quite a poor measurement of the risk。 What he should have done， is to contrast the return against the volatility。 That's what's being measured with something like the Sharpe ratio。Lastly， the algorithm by the book might suffer from hindsight bias。 Sure， the author has found an algorithm that seemingly has performed well within his frame of measurement when doing backtesting。 But what's the guarantee that it will perform good in the future？ Especially when taking the risk into consideration as well。Overall， I think the formula was quite interesting， to be honest。 I'm not against it， and I think it sounds like an interesting investment strategy。 However， as I have written， I think the book is too brief on proving its success。 。。。more
Victor
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The second to last chapter made me giggle: knowing exactly what EBIT， EV and tangible capital employed are the Devil hiding in the details and it's strange not seeing them mentioned in the comments。 It means that they were either ignored or the readers kept them for themselves。 I hope for the latter。A criticism I have is that the tangible capital employed is a less intuitive way of looking into Return of Invested Capital and that financial firms are excluded for Greenblatt's calculations and tha The second to last chapter made me giggle: knowing exactly what EBIT， EV and tangible capital employed are the Devil hiding in the details and it's strange not seeing them mentioned in the comments。 It means that they were either ignored or the readers kept them for themselves。 I hope for the latter。A criticism I have is that the tangible capital employed is a less intuitive way of looking into Return of Invested Capital and that financial firms are excluded for Greenblatt's calculations and that's a pity。 Far from me to disagree with a professor in finances but I think financial firms use debt itself as a working capital meaning that it's interest payment shows up in the EBIT rather than in financing costs， transforming it into something like "EBT" and modifying EV to include only the equity portion with the ROIC remaining unchanged。 But I'd love to be contradicted。 。。。more
Victor Chan
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Very interesting concepts that everyone who's into investing should know。 Very interesting concepts that everyone who's into investing should know。 。。。more
Kartik Kohli
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The books talks about a unique approach and dissects why it is difficult to follow through on it。 However， as a reader you are asked to believe what the author is saying on the face of it。
Karl Niebuhr
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Nobody explains investing in a clearer way than Joel
Андрей С。
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Достаточно прочитать приложение после всех глав （хотя новичкам， возможно， будет интересно）
Thomas Edmund
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It's actually quite hard to rate and review this litte book - its fairly sagely and useful advice， presented in a fairly funny and easy to digest manner。 I guess the challenge is that it kind of sits between levels of knowledge - I wouldn't necessarily recommend to a complete beginner， but then I think if someone had already dived into more technical stuff it may be a little less useful。Given that its a short thesis I wouldn't necessarily worry about picking it up and finding it only so helfpul It's actually quite hard to rate and review this litte book - its fairly sagely and useful advice， presented in a fairly funny and easy to digest manner。 I guess the challenge is that it kind of sits between levels of knowledge - I wouldn't necessarily recommend to a complete beginner， but then I think if someone had already dived into more technical stuff it may be a little less useful。Given that its a short thesis I wouldn't necessarily worry about picking it up and finding it only so helfpul but equally I wouldn't be throwing it on the must-read pile。Actually I have one group that its probably the best for - perhaps people who have a lot of experience in investing but perhaps are struggling or having difficulty deciphering some of the more in depth parts of investing this book is a good bridge！ 。。。more
David Thompson
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Good primer to value investing but leaves a lot of the detail of the approach to be desired
Sunnie_
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A great introduction to investing and the stock market。 It breaks down alot of the jargon involved with plain and simple everyday examples。
Tungstenmouse
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This book is small but still could have been half as long。 The author has good information but talks way too much about other stuff。
Martin Chiu
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A fairly good introduction to the stock market！
Quoc Tuan
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A little book indeedA light reading for any beginner like me who want to start investing， not professionally but as a way to have enough money for retirement。 This book delivered what it advertised。 With a bit of humor， the author gives the simple， easy to understand instruction to beat the market。 This book is too simple for people who already has knowledge or want to know more about finance and stock market。 So for what it is， it is exactly what i need。
Koen V
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Heeel basic maar geeft wel de basis principes van investeren goed aan。 Magische formule die aangegeven wordt moet ik me nog in gaan verdiepen， kan me wellicht iets opleveren
David King
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This review has been hidden because it contains spoilers。 To view it， click here。 The author is a successful investor。 "I’ve known Joel for decades。 He is really smart， really modest， really well intentioned， and—here is the unusual part—really successful。 （I mean: really successful。）"He wrote this book to teach his kids how to invest when they grow up。 Investing is a valuable skill to learn。 "after 14 years of teaching at an Ivy League business school， I am convinced of at least two things:1。 If you really want to “beat the market，” most professionals and academics can’t hel The author is a successful investor。 "I’ve known Joel for decades。 He is really smart， really modest， really well intentioned， and—here is the unusual part—really successful。 （I mean: really successful。）"He wrote this book to teach his kids how to invest when they grow up。 Investing is a valuable skill to learn。 "after 14 years of teaching at an Ivy League business school， I am convinced of at least two things:1。 If you really want to “beat the market，” most professionals and academics can’t help you， and2。 That leaves only one real alternative: You must do it yourself。"Even better， he developed a magic formula that can give you 20% return each year。 "the story even concludes with a magic formula that can make you rich over time。 I kid you not。 Unfortunately， if you don’t believe the magic formula will make you rich， it won’t。"The basis of the magic formula is"find good businesses that can be purchased at bargain prices。 On the basis of your analysis， you select your five favorites and invest in each。 Sell them after one year。 Repeat。"Of course there is the usual disclaimer。 Not even banks can give you 100% guarantee。"First， often the formula doesn’t work。 One of the reasons I know this is the large number of e-mails I received after the first edition of the book was published。 It’s really tough to stick with 。。。more
Srinath
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Around 3。5/5The technique described in this book can be directly applied in US market （as they already maintain a website for that）。 If we want to apply for Indian market， need to do some work in filtering out companies using the prescribed criteria （Not big task， but still a task）Similar to "Coffee Can Investing" where the author describes few filters he used to pick stocks， explains why it works using past data and the reliability of the system。 The book is already short but has anecdotes （and Around 3。5/5The technique described in this book can be directly applied in US market （as they already maintain a website for that）。 If we want to apply for Indian market， need to do some work in filtering out companies using the prescribed criteria （Not big task， but still a task）Similar to "Coffee Can Investing" where the author describes few filters he used to pick stocks， explains why it works using past data and the reliability of the system。 The book is already short but has anecdotes （and examples） which I somehow felt boring。 Otherwise， it's a 5/5Neverthless， if you want to invest in stock market （especially in US）， but don't have much time to research， just follow this one bookDetailed Notes: https://www。notion。so/The-Little-Book-that-Beats-the-Market-a292d8b118eb431292f7a5bef02ff00a 。。。more
Shubham Garg
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Do not miss the appendix section。 If you want just mathematical and practical calculations without the theory that explains it， skip to the appendix directly。 Overall a fun read （never thought that fundamentals in investing can be introduced in such a hilarious way）。
Anas Saad
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Generally I am skeptical about books with such promising titles， but I read this book because many recommended it， and other books by the same author。 The concept is interesting and the proposed formula makes sense。 However， personally， I wouldn't trust it alone without further analyses。 The book is oversimplified and so unnecessarily long。 As you read， it becomes annoyingly long with whole chapters can be literally summarized in few sentences。 I summarize it here:https://anassaad256。medium。com/ Generally I am skeptical about books with such promising titles， but I read this book because many recommended it， and other books by the same author。 The concept is interesting and the proposed formula makes sense。 However， personally， I wouldn't trust it alone without further analyses。 The book is oversimplified and so unnecessarily long。 As you read， it becomes annoyingly long with whole chapters can be literally summarized in few sentences。 I summarize it here:https://anassaad256。medium。com/a-summ。。。 。。。more
Nitosh
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If you want to do long term investment， it is great pickup。
Praveen Choudhary
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This review has been hidden because it contains spoilers。 To view it， click here。 A short book with a simple message。 Buy companies with high earning yield （low P/E） and high ROIC。 They tend to outperform companies with low earnings yield and ROIC。 As simple as that。 The trick is to have the patience to hold for the long term and have a portfolio of stocks （not just one stock）。
Gab
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A simple concept; explained in detail in simple language。
Jamison Johnson
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Great book that goes with the wisdom of value investing and modernizes it。
Eduardo Osniel
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Lectura amena y con lenguaje simple enfocado en la bolsa de valores。
Jason
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Always a fan of little booksThe author has given a simple time tested idea for investing in stocks。 It makes sense and it is simple too。 Not all good things have to be complicated。 The author's sense of humor keeps you engaged。 And he has managed to explain things in a very simple manner。 Planning to see of the magic works for my investments as well。 Always a fan of little booksThe author has given a simple time tested idea for investing in stocks。 It makes sense and it is simple too。 Not all good things have to be complicated。 The author's sense of humor keeps you engaged。 And he has managed to explain things in a very simple manner。 Planning to see of the magic works for my investments as well。 。。。more
Anand
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One of the simplest， light， funny at times and effective book to understand stock market in laymen's language while getting a grip on 2 simple parameters to choose low risk， high-value stocks using a magical formula that worked and continue to work even in the future （Without even full research of the company）。 Joel explains enough alternatives to convince the reader to choose for the formula over others and why。 Must read for every level of investor。 One of the simplest， light， funny at times and effective book to understand stock market in laymen's language while getting a grip on 2 simple parameters to choose low risk， high-value stocks using a magical formula that worked and continue to work even in the future （Without even full research of the company）。 Joel explains enough alternatives to convince the reader to choose for the formula over others and why。 Must read for every level of investor。 。。。more
Michael
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Writing: 3。96Substance:5Overall: 4。48
SP
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This review has been hidden because it contains spoilers。 To view it， click here。 This entire book can be reduced to the one line"Use the magic formula！" Short，simple and to the point。 Its quite basic。 I probably won't need to read it again。Now，onto actually making a list of stocks that might be a part of my magic formula。 This entire book can be reduced to the one line"Use the magic formula！" Short，simple and to the point。 Its quite basic。 I probably won't need to read it again。Now，onto actually making a list of stocks that might be a part of my magic formula。 。。。more
Keven Wang
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Great introduction reading for financial literacy
Marie
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Pretty decent book， I like that the author had some humor。 The jury is still out on if the magic formula works， time will tell。 I think this is worth a read！
Reynard
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Libricino agile e veloce da leggere che， incredibilmente， non è la solita fuffa a cui ci hanno abituati i manualetti di questo tipo。 La strategia proposta dall'autore ha una logica piuttosto convincente che merita sicuramente qualche approfondimento e， possibilmente， una sperimentazione （oculata） sul mercato azionario。 Il mio voto: 4 stelle。 Libricino agile e veloce da leggere che， incredibilmente， non è la solita fuffa a cui ci hanno abituati i manualetti di questo tipo。 La strategia proposta dall'autore ha una logica piuttosto convincente che merita sicuramente qualche approfondimento e， possibilmente， una sperimentazione （oculata） sul mercato azionario。 Il mio voto: 4 stelle。 。。。more
Reader
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