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The Little Book That Still Beats the Market
In The Little Book That Still Beats the Market, Joel Greenblatt expands the successful strategy from the original bestseller to show investors how to profit in any market. Through entertaining anecdotes and practical pearls of wisdom, the book explores the basic principles of successful stock market investing and then reveals a "magic formula" that makes buying good companies at bargain prices automatic. It also ties into Greenblatt's latest effort (formulainvesting.com) that allows investors to either manage their own accounts or have their accounts professionally managed by someone on Greenblatt's team. Either way, the magic formula still holds: the new web site just makes it that much easier. For example, if an investor chooses to manage his or her own account, a list of "magic formula" stocks is provided from which to pick with a click of a button, and alerts are sent automatically when it is time to consider selling a security.
The formula has been tested over hundreds of different periods and thousads of stock picks and has been proven extremely profitable for those who are willing to "stick with it." Greenblatt guides you down the path of investment success and explains why his approach will continue to work—even after everyone "knows" it.
It's never too early or too late to start investing, and by following the simple steps and magic formula that are clearly outlined and explained, you can achieve extraordinary long-term investment results with a very low level of risk. With The Little Book That Still Beats the Market as your guide, you'll know exactly where to go and what to do—and it won't even take much time, just a littleeffort.
208 pages, Paperback
First published January 1, 2007
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Displaying 1 - 30 of 593 reviews
March 2, 2011
I'm far from a financial expert (don't ask me about my own portfolio... I tend to leave money in CDs and mutual funds and forget about it). However, I have done a bit of reading, and know enough to smell BS or something that has the ring of truth.
Greenblatt's book is aimed at the very naive (in the sense of not knowing much, not in the sense of being stupid or gullible) investor. That is, the average American who thinks s/he can use "common sense" and a few hot tips or some "expert opinions" on TV to pick good stocks. The early chapters are a very, very simple explanation of how the stock market works. Simple enough for a ten-year-old. Then he goes on to explain his "magic formula," which might sound like hucksterism, but basically it's a highly simplified version of Benjamin Graham's "value investing" strategy. (Graham was the guy who taught Warren Buffet.) The idea is basically: Buy high-value companies that are currently priced too low, do this consistently, and most importantly (and the reason why everyone isn't doing it): hang on for years. Greenblatt spends a lot of time emphasizing this: the market goes up and down, and you will see your portfolio go down, sometimes for years consecutively. The only reason following his or any strategy makes sense is if you believe that over the long run, it will perform well with the peaks outweighing the valleys. Most people will be enamored of a strategy until they've been watching all their stocks go down, down, down for two years straight (which is bound to happen now and then) and then they panic, sell, and move to some more promising strategy.
Greenblatt shows pretty compelling evidence that value investing does work, and consistently beats the market over a time frame of 5, 10 or 30 years, even with periodic dips and recessions. And he gives step by step instructions on how to pursue this strategy. But the main thing is you have to believe in it enough to stick with it, even during temporary periods where even the market average is beating your results.
Also, important caveat: he uses historical information and he explains the principles behind the strategy (i.e., which underly Graham's value investment model) in a simple and clear way, so they really do make sense. But, the stock market is a capricious beast: no one can be sure that for the next thirty years it won't suddenly start behaving in a wildly different manner. So, no guarantees, no matter how much sense anyone's advice seems to make.
Greenblatt also glosses over a few things, like fees (even for intermittent stock purchases, the fees can add up), and he barely touches on taxes, which can also take a bite out of your investment. He does mention IRAs, but does not explain them. That's understandable; this is a slim book and going into taxes and retirement funds and exactly where and how to buy stocks would bloat it quickly. But while I think his advice is sound, this book alone doesn't quite give you enough information to run out and start investing. But it will certainly give you a good start. Most importantly, if you take his advice, even if you don't follow his strategy precisely, you'll know better than to try day-trading or other short-term strategies (he tells the reader outright that unless you're a professional business analyst and probably not even then, you should not try to stock-pick on your own), and you'll be ready to commit to investing for the long term.
Greenblatt's book is aimed at the very naive (in the sense of not knowing much, not in the sense of being stupid or gullible) investor. That is, the average American who thinks s/he can use "common sense" and a few hot tips or some "expert opinions" on TV to pick good stocks. The early chapters are a very, very simple explanation of how the stock market works. Simple enough for a ten-year-old. Then he goes on to explain his "magic formula," which might sound like hucksterism, but basically it's a highly simplified version of Benjamin Graham's "value investing" strategy. (Graham was the guy who taught Warren Buffet.) The idea is basically: Buy high-value companies that are currently priced too low, do this consistently, and most importantly (and the reason why everyone isn't doing it): hang on for years. Greenblatt spends a lot of time emphasizing this: the market goes up and down, and you will see your portfolio go down, sometimes for years consecutively. The only reason following his or any strategy makes sense is if you believe that over the long run, it will perform well with the peaks outweighing the valleys. Most people will be enamored of a strategy until they've been watching all their stocks go down, down, down for two years straight (which is bound to happen now and then) and then they panic, sell, and move to some more promising strategy.
Greenblatt shows pretty compelling evidence that value investing does work, and consistently beats the market over a time frame of 5, 10 or 30 years, even with periodic dips and recessions. And he gives step by step instructions on how to pursue this strategy. But the main thing is you have to believe in it enough to stick with it, even during temporary periods where even the market average is beating your results.
Also, important caveat: he uses historical information and he explains the principles behind the strategy (i.e., which underly Graham's value investment model) in a simple and clear way, so they really do make sense. But, the stock market is a capricious beast: no one can be sure that for the next thirty years it won't suddenly start behaving in a wildly different manner. So, no guarantees, no matter how much sense anyone's advice seems to make.
Greenblatt also glosses over a few things, like fees (even for intermittent stock purchases, the fees can add up), and he barely touches on taxes, which can also take a bite out of your investment. He does mention IRAs, but does not explain them. That's understandable; this is a slim book and going into taxes and retirement funds and exactly where and how to buy stocks would bloat it quickly. But while I think his advice is sound, this book alone doesn't quite give you enough information to run out and start investing. But it will certainly give you a good start. Most importantly, if you take his advice, even if you don't follow his strategy precisely, you'll know better than to try day-trading or other short-term strategies (he tells the reader outright that unless you're a professional business analyst and probably not even then, you should not try to stock-pick on your own), and you'll be ready to commit to investing for the long term.
January 30, 2011
Wish I hadn't wasted any money on this one. Although I am a big proponent of value investing and wanted to give Greenblatt a chance, this book is far too simple to be useful to anyone with a more than a passing interest in the stock market. Return on Capital and Earnings Yield are not terrible filters to start off with, but I do believe there is more to successful value investing than applying a simple formula.
Greenblatt is spot on when he says most people end up losing money because of impatience and lack of discipline in following a consistent strategy. However, his formula will be too opaque for non-financially literate investors and too over-simplified for seasoned investors to trust and stick with over the long run - undoubtedly one of the key success factors to value investing... If one does favor this type of formula investing, then I think the best option is a Dimensional Fund Advisors (DFA) low-fee index enhanced fund which rebalances a broad portfolio of stocks every so often based on value factors similar to those proposed by Greenblatt (and has a long track record of above average performance). For me the biggest issue to this type of investing is that it doesn't avoid large bubbles that periodically form in the market. If you are always fully invested even in the height of an unfettered, over-confident bull market then you miss a central Graham tenet on how to deal with Mr. Market - i.e. sell when he is unrealistically confident. I believe pulling back from frothy markets played a large role in the success of both Buffet and Graham.
To conclude, this book is written for complete novices to the stock market and contains very little red meat for more serious investors. The only pro was not wasting too much time as it's an extremely quick read. This will be the last Greenblatt book I ever read.
If you want a better alternative pick up The Intelligent Investor by Ben Graham or for a simpler but still credible alternative pick up The Little Book on Value Investing by Christopher Browne. Both are excellent reads that will unquestionably help you invest sensibly over the long term.
Greenblatt is spot on when he says most people end up losing money because of impatience and lack of discipline in following a consistent strategy. However, his formula will be too opaque for non-financially literate investors and too over-simplified for seasoned investors to trust and stick with over the long run - undoubtedly one of the key success factors to value investing... If one does favor this type of formula investing, then I think the best option is a Dimensional Fund Advisors (DFA) low-fee index enhanced fund which rebalances a broad portfolio of stocks every so often based on value factors similar to those proposed by Greenblatt (and has a long track record of above average performance). For me the biggest issue to this type of investing is that it doesn't avoid large bubbles that periodically form in the market. If you are always fully invested even in the height of an unfettered, over-confident bull market then you miss a central Graham tenet on how to deal with Mr. Market - i.e. sell when he is unrealistically confident. I believe pulling back from frothy markets played a large role in the success of both Buffet and Graham.
To conclude, this book is written for complete novices to the stock market and contains very little red meat for more serious investors. The only pro was not wasting too much time as it's an extremely quick read. This will be the last Greenblatt book I ever read.
If you want a better alternative pick up The Intelligent Investor by Ben Graham or for a simpler but still credible alternative pick up The Little Book on Value Investing by Christopher Browne. Both are excellent reads that will unquestionably help you invest sensibly over the long term.
March 18, 2019
As a general rule, if a book promises you a magical money-making formula that works if and only if you truly believe in it, close that book. I do not know whether the author's claims are true or not but the way he sells it screams "scam" to me. In fact, it looks like a genius ponzi scheme which lets you buy stocks and then advertise them to your followers, thus increasing their price. Not to mention the income from the sales of the book itself. On the positive side, the introduction explains some financial terminology in simple terms and the book is written in a very casual tonne.
February 8, 2021
What a waste of time. I’m not sure I should even call it a book. It sounded like some unnecessarily long and underwhelming blog post. Too repetitive and poorly written. Extremely pointless conclusions, e.g. “If you answered that 30% is obviously better than 20% and 10% you would be correct!” Seriously?
The little books by Christopher H. Browne and John C. Bogle are a much better choice than this.
The little books by Christopher H. Browne and John C. Bogle are a much better choice than this.
February 11, 2015
A few weeks ago I read another book from Joel Greenblatt called "the big secret for the small investor". At the time I felt disappointed by the level of simplicity but still wanted to continue to learn from the author. I understand now that back then I missed the point. The principles of value investing are meant to be that way: good businesses at bargain prices, and Joel Greenblatt masters the art of telling this story. Yet 30 holdings to rebalance on a yearly basis seems a lot. I can't help but thinking that Warren Buffet too has a point with his "20 punch card" concept. Now, just like John Mihaljevic in the Manual of ideas, I wonder if any further filtering can be added to narrow down the list of holdings a bit. Anyway overall I enjoyed this little book and particularly loved the down to earth funny stories at the beginning of each chapter. I understand now why Bruce Greenwald recommended it "It should be mandatory reading for all serious investors from 4th grade on up" link.
March 2, 2017
When people say, "that book should have been a blog post" this is what they mean.
Usually, I like the "Little Books" series but this one was no good for me. I do like Greenblatt though, I strongly suggest you read You Can Be a Stock Market Genius instead.
Usually, I like the "Little Books" series but this one was no good for me. I do like Greenblatt though, I strongly suggest you read You Can Be a Stock Market Genius instead.
April 30, 2023
Positivt: prinsippene er gode. Enkel og grei formel som bunner ut i at man skal kjøpe kvalitet til en billig penge, for så å vente til resten av tomsingene på markedet skjønner at aksjen er kvalitet. For det vil de skjønne, men det kan ta litt tid. Den er grei.
Negativt: en tredjedel uti boka var jeg lut lei av å høre de tre ordene "the magic formula". Halvveis uti boka var de tre ordene mitt personlige Vietnam, og mot slutten hadde jeg mer lyst til å hoppe utfor verandaen enn å høre de tre ordene én gang til. Jeg har ikke holdt tellinga, men min indre Lilli Bendriss sier meg at de tre ordene er nevnt ca. 4568 ganger ila. boka.
I tillegg er første del av boka litt dryg hvis man kjenner prinsippene rundt aksjehandel og markedspsykologien sånn noenlunde. Det er som å være ferdig med grunnskolen, og plutselig skal du tilbake til å høre på "Per har to epler. Så får han et eple til" osv.
Forfatter kunne også spart seg for tiraden mot kvaliteten på det amerikanske skolesystemet og hva som kan gjøres for å bedre det. Det kommer litt utav det blå, og burde vært hagesakset ut.
På ett tidspunkt begynner han også å gå litt for konkret inn på skattesatsene i USA, og bruke disse som grunnlag for handlinger i markedet. All den tid skattesatser kan endre seg like kjapt som promillenivået til Charter-Svein på cava-søndag, og i tillegg blir veldig USA-sentrert, tror jeg det er lurt å holde det utenfor en bok som skal gi generelle investeringsråd til et globalt publikum.
Negativt: en tredjedel uti boka var jeg lut lei av å høre de tre ordene "the magic formula". Halvveis uti boka var de tre ordene mitt personlige Vietnam, og mot slutten hadde jeg mer lyst til å hoppe utfor verandaen enn å høre de tre ordene én gang til. Jeg har ikke holdt tellinga, men min indre Lilli Bendriss sier meg at de tre ordene er nevnt ca. 4568 ganger ila. boka.
I tillegg er første del av boka litt dryg hvis man kjenner prinsippene rundt aksjehandel og markedspsykologien sånn noenlunde. Det er som å være ferdig med grunnskolen, og plutselig skal du tilbake til å høre på "Per har to epler. Så får han et eple til" osv.
Forfatter kunne også spart seg for tiraden mot kvaliteten på det amerikanske skolesystemet og hva som kan gjøres for å bedre det. Det kommer litt utav det blå, og burde vært hagesakset ut.
På ett tidspunkt begynner han også å gå litt for konkret inn på skattesatsene i USA, og bruke disse som grunnlag for handlinger i markedet. All den tid skattesatser kan endre seg like kjapt som promillenivået til Charter-Svein på cava-søndag, og i tillegg blir veldig USA-sentrert, tror jeg det er lurt å holde det utenfor en bok som skal gi generelle investeringsråd til et globalt publikum.
January 12, 2019
This book first explains complex financial and investing concepts in a highly approachable and relatable manner (albeit with a folksy tone that may wear on some). With that foundation, it then explains (in just a few brisk pages) the author's stock-picking methodology. That this (or any) strategy can consistently outperform the overall stock market is, of course, a highly suspect claim. But the author makes a persuasive case, by far the most persuasive I've seen in my short investing career. Reading this book itself is an excellent return on investment, as it is short but packed with knowledge, and, the more I reflect on it, the more I realize its value. I'm eager to consider its ideas for my own investment club and portfolio. Finally, I read this book because it was highly recommended during the Tim Ferriss's podcast interview of Mr. Money Mustache, and so I now want to read more books that those two internet personalities recommend.
June 28, 2021
Pretty easy to understand which is nice since I'm only a beginner. Can be repetitive at times but the magic formula that is promoted all throughout the book seems to be worth a shot.
April 27, 2023
Reads okay, my score is based on the fact that I don't live in the US and I have not tested if the principles work in Europe and for me.
July 11, 2025
As a disclaimer, I read this book for a challenge, I would not have chosen to read it if it was fully up to me.
This was a pretty bad book that did not actually give financial advice, it just was trying to prove a method that the writer seemingly developed and was trying to sell to other people, even if it was for free.
Reading notes:
He just keeps talking about how big of a gesture he does to other people and how he really wants to help, but come on dude, you are making money on a book that claims to have a magic formula.
It is embarrassing to hear about how this guy thinks that he is helping people of all ages by explaining that when you hold your money in the bank you earn interest.
I am pretty sure that this book is for like, 6 year olds, because he explains bonds.
Haha, did you know that gambling is bad?
Okay, now he is explaining shares.
Haha, the joke about “those pesky employees” wanting to be paid, so funny.
I hate the way this book is written. I hate how the writer is telling us, how much of a favour he is doing by providing basic information and how he is “forced to” hold our hand through everything.
“I have taught an investing course to a group of graduate business students at an Ivy League university” but also the only reason why shares change that much is that people are just in a good or bad mood.
The writer is pushing his “But you do not fully trust me, because you just bought a book, right” agenda so often, it is like in every chapter so far.
On chapter 5:
First of all, there are reasons to open a store, that are not just “to make money”.
Second of all, you do not lose money that you do not make. Just because you could have had a bigger profit does not mean that you lost money.
Third of all, the joke about “don’t give money to guys named Jimbo” is racist.
I appreciate that he talks for so long about how well his formula works, really just makes me feel like he is struggling.
On chapter 7:
Why is he talking about the revolutionary war with no historical knowledge? He admits multiple times that he has no clue about history and yet keeps talking about how it is important in connection to his formula not working. Bro really sensationalized history, drew wrong conclusions and went: “Do not blindly trust my book”. Bro, no worries, never even considered trusting it.
However, why does he spend the whole chapter 6 talking about how well his formula works, just to start proving that it does not?
This chapter is basically: “Only smart and cool people will follow the magical formula and they will be right.”
Bro keeps pushing the whole “you need to believe, bro” agenda.
On chapter 9:
Cool anecdote bro, you forgot to tie it in.
On chapter 11:
Grr, do not use something that is not my formula, u r stupid. - Joel Grennblatt
On chapter 12:
This dude is like “stoke brokers only want to sell you a service”, while selling a book with a magic equation.
This book suddenly turned into a youtube video with references to the end of the book.
On chapter 13:
This is the moment in the book, when it got so so so tiring.
At least he talks about the education system, so he is not all that terrible
I thank the gods for the person that bookmarked the page in my library book where he writes the equation, they have truly saved many people from this annoying book.
This was a pretty bad book that did not actually give financial advice, it just was trying to prove a method that the writer seemingly developed and was trying to sell to other people, even if it was for free.
Reading notes:
He just keeps talking about how big of a gesture he does to other people and how he really wants to help, but come on dude, you are making money on a book that claims to have a magic formula.
It is embarrassing to hear about how this guy thinks that he is helping people of all ages by explaining that when you hold your money in the bank you earn interest.
I am pretty sure that this book is for like, 6 year olds, because he explains bonds.
Haha, did you know that gambling is bad?
Okay, now he is explaining shares.
Haha, the joke about “those pesky employees” wanting to be paid, so funny.
I hate the way this book is written. I hate how the writer is telling us, how much of a favour he is doing by providing basic information and how he is “forced to” hold our hand through everything.
“I have taught an investing course to a group of graduate business students at an Ivy League university” but also the only reason why shares change that much is that people are just in a good or bad mood.
The writer is pushing his “But you do not fully trust me, because you just bought a book, right” agenda so often, it is like in every chapter so far.
On chapter 5:
First of all, there are reasons to open a store, that are not just “to make money”.
Second of all, you do not lose money that you do not make. Just because you could have had a bigger profit does not mean that you lost money.
Third of all, the joke about “don’t give money to guys named Jimbo” is racist.
I appreciate that he talks for so long about how well his formula works, really just makes me feel like he is struggling.
On chapter 7:
Why is he talking about the revolutionary war with no historical knowledge? He admits multiple times that he has no clue about history and yet keeps talking about how it is important in connection to his formula not working. Bro really sensationalized history, drew wrong conclusions and went: “Do not blindly trust my book”. Bro, no worries, never even considered trusting it.
However, why does he spend the whole chapter 6 talking about how well his formula works, just to start proving that it does not?
This chapter is basically: “Only smart and cool people will follow the magical formula and they will be right.”
Bro keeps pushing the whole “you need to believe, bro” agenda.
On chapter 9:
Cool anecdote bro, you forgot to tie it in.
On chapter 11:
Grr, do not use something that is not my formula, u r stupid. - Joel Grennblatt
On chapter 12:
This dude is like “stoke brokers only want to sell you a service”, while selling a book with a magic equation.
This book suddenly turned into a youtube video with references to the end of the book.
On chapter 13:
This is the moment in the book, when it got so so so tiring.
At least he talks about the education system, so he is not all that terrible
I thank the gods for the person that bookmarked the page in my library book where he writes the equation, they have truly saved many people from this annoying book.
April 13, 2020
Great book to get deeper understanding of how trading works.
July 11, 2015
Want my attention? Free books will usually do it! Picked this up at a recent trade show for investment professionals as I like to review what is available in the popular press so I can field questions and comments from clients. (Explains why I subscribe to a lot of "financial pornography" like "Money", "Kiplingers" and "Consumer Reports".) At any rate, this simplistic, repetitive and slender volume still contains some worthy ideas. The "magic formula" emphasizes investments in companies that combine low valuations as expressed by earnings yield - EBIT/Enterprise value (similar to the P/E ratio but containing debt in addition to market capitalization divided into earnings before Interest and taxes) and return on capital - EBIT/net working capital + net fixed assets. Take these two factors which equate to buying "good businesses cheaply", pick about 30 of the larger ones and go for the long haul to produce market beating returns. (They have a website that will run the numbers and rankings for you.)
Normally when an investment technique is found to be successful, many folks jump on the bandwagon and the technique rapidly loses its advantage. Why does this continue to work? Simply because it does not always work. Sometimes over shorter periods of time growth stocks will beat this value approach, other times certain segments may fall out of favor and under-perform. As has been noted, in the short term "Mr. Market" can be an idiot; in the long term he tends to get it right and that is when this approach is most powerful. So, if you are going to put it to work, approach it with discipline and patience and it should reward your efforts. But, as they say, past performance is no guarantee of future results!
While it is an entertaining and informative read, many important areas are glossed over such as taxes, asset allocation in general, the integration of investing with other financial planning issues and the development of alternate investment vehicles. But, if those were added I don't think it would be the "little book" anymore, would it?
Normally when an investment technique is found to be successful, many folks jump on the bandwagon and the technique rapidly loses its advantage. Why does this continue to work? Simply because it does not always work. Sometimes over shorter periods of time growth stocks will beat this value approach, other times certain segments may fall out of favor and under-perform. As has been noted, in the short term "Mr. Market" can be an idiot; in the long term he tends to get it right and that is when this approach is most powerful. So, if you are going to put it to work, approach it with discipline and patience and it should reward your efforts. But, as they say, past performance is no guarantee of future results!
While it is an entertaining and informative read, many important areas are glossed over such as taxes, asset allocation in general, the integration of investing with other financial planning issues and the development of alternate investment vehicles. But, if those were added I don't think it would be the "little book" anymore, would it?
June 1, 2024
A preliminary reading on how to pick a stock. We know that if the company is rightly valued and if the price seems to be trading at a discount, it is reasonable to buy the share at a higher margin of safety. This was well covered by Benjamin Graham in his book The Intelligent Investor. Most importantly, in order to find out if the company has future potential, there are three essential parameters one must consider: earnings yield, return on capital and competitive advantage. Usually, a high return on capital comes from a competitive advantage. This is the underlying principle behind picking “value stocks”.
While Saurav Mulherjhea called this as "Coffee Can Investing", Professor Joel Greenblatt terms it "Magic Formula". Yet, the magic formula has a few shortcomings. This doesn't work for mid or small caps. Relying on the law of averages, unless you choose around 30 large cap stocks based on their ranking relative to the above parameters, you wouldn't be able to beat the market. Even if you consider buying thirty large cap stocks, each stock in the mentioned range bound would be trading at a higher price (most of the shares in Nifty are priced above Rs. 1000 per piece). Unless one wants to wait for a catastrophic market crash, and invest in a downturn, the best way to mimic, if not beat the market, is to invest in low-cost index Funds or ETFs.
Valuing a business is a skill, and it takes time to get hold of the nuances and dynamics of the market and economics. Understanding financial statements is a skill that develops over a period of time through consistent reading. That's why the author rightly notes, “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”.
While Saurav Mulherjhea called this as "Coffee Can Investing", Professor Joel Greenblatt terms it "Magic Formula". Yet, the magic formula has a few shortcomings. This doesn't work for mid or small caps. Relying on the law of averages, unless you choose around 30 large cap stocks based on their ranking relative to the above parameters, you wouldn't be able to beat the market. Even if you consider buying thirty large cap stocks, each stock in the mentioned range bound would be trading at a higher price (most of the shares in Nifty are priced above Rs. 1000 per piece). Unless one wants to wait for a catastrophic market crash, and invest in a downturn, the best way to mimic, if not beat the market, is to invest in low-cost index Funds or ETFs.
Valuing a business is a skill, and it takes time to get hold of the nuances and dynamics of the market and economics. Understanding financial statements is a skill that develops over a period of time through consistent reading. That's why the author rightly notes, “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”.
January 8, 2015
Malá kniha, která (stále) poráží trh. Tak nějak by zněl český překlad 2. rozšířeného vydání knížky, která rozvířila vody hodnotového investování více než jakýkoli jiný titul posledních let. Autorem je legendární investor Joel Greenblatt, který ji podle svých slov napsal tak jednoduše, aby z ní mohly těžit (a bohatnout) i jeho děti. Text je skutečně nevídaně srozumitelný a stručný, což rozhodně není u toho druhu literatury zvykem. Důležitý je ale obsah. Grennblatt nabízí až absurdně jednoduchý „magický vzorec“ hodnotového investování sestávající z pouhých dvou screeningových veličin. Detailně popisuje celou investiční strategii a na historických datech dokazuje pozoruhodně vysoký výnos oproti tržnímu průměru. Všechno má ale svůj háček, a tím je v tomto případě nevyrovnaný výnos v čase. Minimální návratový horizont je 3 roky, optimálně však 5-10 let, a vyžaduje značnou disciplínu navzdory táhlým pádům. Tedy nic pro slabé povahy! V investorských a finančních kruzích byl ovšem Greenblattův spisek přijat velice kladně. Stal se nejen best-sellerem, ale také okamžitou klasikou, pročež došlo i na toto doplněné vydání. Přestože záběr knihy je velmi omezený, jde prakticky o povinnou četbu, ať už se rozhodnete Joelovými radami řídit či nikoliv. Přinejmenším to můžete brát jako vzrušující mentální experiment a potrápit vlastní kritické myšlení i mozkové závity. Skvělej chlápek!
July 13, 2015
You can almost judge this book from its title (and it beats “Investing for Dummies” although it meets the same goal). While author Greenblatt is a professor at a business school, it is less a primer about stock investments (although it does serves as a 101, for illiterate investors such as myself), but more to push his “Magic Formula” for investing, which is actually quite simple, backed by years of his research that shows it beats the market, and can be applied with the help of his free website. Essentially, you want to buy good companies, at low prices, which you can do if you find companies that high high return on capital, but low price to earnings ratios. Two big caveats--since the formula doesn’t always work, particularly in the short term, you need to plan to stick to the formula for the long term and buy 20-50 stocks, because it requires the rule of averages. Even if you don’t plan to use his formula (although I must say I was convinced he will make me rich, if I ever getting around to following his advice), the book is a very entertaining read (I would characterize his writing as Yiddish-style humor) written with the goal of explaining the market to a middle schooler. Also, as the book title implies, it’s a little book, so the time you need to read it won’t be so much of an, ahem, investment.
May 20, 2021
As the title hints, this one is centered around a set of simple strategies (called the “magic formula”) that helps investors beat the market. The author pulls no punches here — he readily admits the pros and cons of such a strategy and invites readers to try their hand at it, despite the fact that it doesn’t necessarily win all the time.
But, as he also suggests, the fact that the formula doesn’t beat every strategy when analyzed over all time periods is exactly what makes it so good; success with it requires patience, and some investors can’t stand to wait very long. That lack of patience prevents everyone from piling into the book’s core methodology and sending the companies it promotes to prices that no longer make sense.
It’s sometimes a bit confusing that solid investing can be so simple. But this book, and all the statistics and historical data within it, show us that simple really can lead to great results. And results are all that matters in investing — not the level of difficulty or complexity of one's approach.
Definitely check this one out if you’re looking for a new perspective.
-Brian Sachetta
Author of “Get Out of Your Head”
But, as he also suggests, the fact that the formula doesn’t beat every strategy when analyzed over all time periods is exactly what makes it so good; success with it requires patience, and some investors can’t stand to wait very long. That lack of patience prevents everyone from piling into the book’s core methodology and sending the companies it promotes to prices that no longer make sense.
It’s sometimes a bit confusing that solid investing can be so simple. But this book, and all the statistics and historical data within it, show us that simple really can lead to great results. And results are all that matters in investing — not the level of difficulty or complexity of one's approach.
Definitely check this one out if you’re looking for a new perspective.
-Brian Sachetta
Author of “Get Out of Your Head”
September 2, 2020
This book is just so damn good! It’s simple to read. Extreme laymen like me should find no difficulty in understanding the concepts of this book.
The author is really humorous as well! Seriously sounds like he’s messing around with their kids while teaching them some important things, and thereby, the book wouldn’t feel boring at any point in time. I highly appreciate the author’s funny narration, and it genuinely does seem like the book and the formula taught in the book are extremely valuable and helpful if one is willing to be patient.
Regardless, I shall still be a bit sceptic, since I haven’t gotten to apply this formula yet. Hence, I gave it one less star.
I shall most definitely try this formula out (for maybe half a decade or so), and come back to update my rating to either 5 or 0. But I’m pretty certain, in the long run this formula would work.
I’m truly thankful for this book. It has been a pleasant read, quite possibly a very important book to guide my investments throughout my life.
The author is really humorous as well! Seriously sounds like he’s messing around with their kids while teaching them some important things, and thereby, the book wouldn’t feel boring at any point in time. I highly appreciate the author’s funny narration, and it genuinely does seem like the book and the formula taught in the book are extremely valuable and helpful if one is willing to be patient.
Regardless, I shall still be a bit sceptic, since I haven’t gotten to apply this formula yet. Hence, I gave it one less star.
I shall most definitely try this formula out (for maybe half a decade or so), and come back to update my rating to either 5 or 0. But I’m pretty certain, in the long run this formula would work.
I’m truly thankful for this book. It has been a pleasant read, quite possibly a very important book to guide my investments throughout my life.
December 16, 2020
Placed a pretty good foundation for what it means to buy businesses at bargain prices. Because you always hear about it but never actually know what criteria a business has to pass to be consider good while also being undervalued thus being sold at a bargain price.
The combination of high return on capital with a high earnings yield (earnings per share) is what makes up Joel's "magic formula". Now idk if the magic formula works but he does do a good job explaining why it *should* work and how it has worked in the past. So.....fingers crossed?
The combination of high return on capital with a high earnings yield (earnings per share) is what makes up Joel's "magic formula". Now idk if the magic formula works but he does do a good job explaining why it *should* work and how it has worked in the past. So.....fingers crossed?
January 20, 2015
I read this book after reading 'the intelligent investor', and had to get used to the simplicity in which this book is told. At first I liked it, because it is almost straight forward what he is telling, but it gets kind of annoying at the second half of the book.
Too repetetive, and he's promoting his so-called 'magic formula' too much. Still a nice read if youre into investing though! Not the only book youll only need to read on investing as mentioned.
Too repetetive, and he's promoting his so-called 'magic formula' too much. Still a nice read if youre into investing though! Not the only book youll only need to read on investing as mentioned.
March 1, 2021
I liked this book. It had its moments of wit and moments where I thought it sounded a little too good to be true. Regardless, I think its principles will be useful to me moving forward. I wouldn't blindly follow the formula in this book, however I will use it for screening in the future.
September 2, 2014
Value premium
Buy low sell high
EBIT / (Net fixed assets + net op WC)
EBIT / EV
magicformulainvesting.com
Hold for 1 year
Enter every 2-3 months
20-30 diversification recommended
Buy low sell high
EBIT / (Net fixed assets + net op WC)
EBIT / EV
magicformulainvesting.com
Hold for 1 year
Enter every 2-3 months
20-30 diversification recommended
This entire review has been hidden because of spoilers.
January 17, 2021
Jawel: ik ben belegger geworden. En aangezien ik nog geen 1 dag ooit economieles heb gehad, was dit boek wel nodig. Ik vind z’n theorie top, maar de manier van opschrijven helemaal niks. Het hoofddeel van zijn boek schrijft hij voor beleg-noobs. Deels handig, maar uiteindelijk eindigt het met dat je hersenloos zijn site moet gebruiken voor zijn “magische formule”. Vervolgens is er een stukje voor mensen die er meer vanaf weten. Maar dat is dan weer juist zo erg niet-uitgelegd dat ik daar ook niks mee kon. Had liever gezien dat hij dat laatste stuk zou uitleggen voor alle beleg-noobs die minstens één hersencel bezitten.
June 8, 2022
I can see where some may say that this is an oversimplification of analysis but the author clearly demonstrates that the ‘Magic Formula’ does not always work and if it did, it would not be as successful.
I think my main takeaways are:
1) this is a very fun, easy to follow book to have on your shelf and serve as a introduction to equities for one’s children.
2) do not blindly rely on the formula for success but perhaps look at it as an additional screen or checklist when analysing equities.
Fantastic read and highly recommended for all levels of investor experience!
I think my main takeaways are:
1) this is a very fun, easy to follow book to have on your shelf and serve as a introduction to equities for one’s children.
2) do not blindly rely on the formula for success but perhaps look at it as an additional screen or checklist when analysing equities.
Fantastic read and highly recommended for all levels of investor experience!
November 21, 2022
"Bol qazanclı şirkətlərin səhmlərini ən ucuz qiymətə alın və uzun müddət saxlayın." Yəqin ki, bu kitabı bu cümləylə izah edə bilərəm. Desəm bəlkə inanmazsınız amma kitabdakı əsas fikir də elə sadəcə bu cümlədən ibarətdir :) Mənə çox maraqlı gəlir ki, çox rahatlıqla bloq yazısı ola biləcək kitablar, necə olur ki, kitab kimi çap olunur və hətta bestseller olurlar. Amma haqqını yemiyim, kitabın appendiks hissəsində yazıçı öz sehrli düsturunun iqtisadi olaraq necə hesablandığını açıqlamaq zəhmətinə girir heç olmasa :)
September 4, 2020
This is a simple book almost to the point of being useless. But being that simple really emphasis the facts of what is really important when it comes to investing in stocks. In doing this I believe it does a great job at its goal. Which is an introduction to Value Investing and a reminder of the basics of evaluating a business. I also like the idea of the magic formula for the purpose of eliminating the human emotion from the equation which I believe to be the biggest crutch in investing.
Overall a solid read but nothing new if you have already read lots from other value investors.
Overall a solid read but nothing new if you have already read lots from other value investors.
July 27, 2021
2.5
If you are completely new to the stock market world, this might provide some basic concepts. Good rationale and disclaimers given for the so called “magic formula”.
However the examples provided to explain some these concepts are over simplified. And there is this childish tone that runs throughout the book which is really irritating.
It’s a quick ‘skim through’ resource if you are new to the investing world.
If you are completely new to the stock market world, this might provide some basic concepts. Good rationale and disclaimers given for the so called “magic formula”.
However the examples provided to explain some these concepts are over simplified. And there is this childish tone that runs throughout the book which is really irritating.
It’s a quick ‘skim through’ resource if you are new to the investing world.
January 14, 2022
Me parece un buen libro de iniciación al análisis empresarial, para alguien que no sabe nada de como estudiar la situación de una empresa me parece ideal.
Para mi gusto son demasiadas páginas (y eso que es corto) para decirte que inviertas en las empresas con mejor rentabilidad y retornos sobre el capital a la vez.
Lo que más instructivo me ha resultado han sido las últimas páginas, quizás también porque son las más técnicas y profundiza algo mas en el cálculo de esta ”fórmula mágica”
Para mi gusto son demasiadas páginas (y eso que es corto) para decirte que inviertas en las empresas con mejor rentabilidad y retornos sobre el capital a la vez.
Lo que más instructivo me ha resultado han sido las últimas páginas, quizás también porque son las más técnicas y profundiza algo mas en el cálculo de esta ”fórmula mágica”
March 10, 2021
The author presents his formule to outperform the market.
Picking certain companies, quarterly purchasing, selling after minimum one year. Patience is key here. The author created a good website to screen the market. Keeping a stock for a year might be a challenge for me because of Islam Shariah compliance (interests %).
However, I already have started and will see.
Picking certain companies, quarterly purchasing, selling after minimum one year. Patience is key here. The author created a good website to screen the market. Keeping a stock for a year might be a challenge for me because of Islam Shariah compliance (interests %).
However, I already have started and will see.
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