Archive for May, 2013

The Little Book That Still Beats the Market – Joel Greenblatt

May 26th, 2013

The Little Book That Still Beats the Market is a New York Times Bestseller by Joel Greenblatt which is actually a revision on his previous book with almost the same title : The Little Book That Beats the Market

There are 13 short chapters to reveal the author’s very own ‘magic formula’ to beat the stock market.
The book is written in a very easy to understand way, in fact there is not much technical charts or formula presented as he has mentioned from the beginning of the book that he intended to write this book as education for his children, aged six to fifteen.

So rest assured, that any layman can understand the content and at some instances, examples are presented as small business (owned by children) to visualize a company or shares.

The question for any reader or interested to pick up this book would probably be : What is the magic formula?
In my own personal opinion, the reason that the magic formula term is used is only to hype up the interest towards the book as it has been used repeatedly in every chapter and almost every page.
There is nothing like a new breakthrough in science on how to consistently beat the share market.
The formula that the author presents is to buy above-average profit earning companies at below average price for long term investment, as simple as that.
However there are some tweaks to the formula or how to manage such portfolio, but I am not going to reveal that.
Anyone seriously interested should buy the book, as it is really not that much of an investment for a possible much higher returns.
Well, it is actually revealed here.

Most of the chapters are elaborated to make some points understood though, such as the formula will not work in short period of time, have proven to be effective with data for the past years and some more convincing on why it would work if you are able to hold your investment by following the magic formula.

It is mentioned that the formula will work for all the markets, although the author is primarily targeting the Standard & Poor’s Stock or North America’s market with data from Compustat‘s database.

The book shares the author’s creation of a website to screen such stocks. For more information, head here
The book is an easy and quick read, and again in my humble personal opinion, if you invest in good companies, they should be able to beat the market anyway in the long run.
If not, they are not that good! 🙂

Happy Investing!

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