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Download The Little Book That Still Beats the Market epub

by Andrew Tobias,Joel Greenblatt

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.

Download The Little Book That Still Beats the Market epub
ISBN: 0470624159
ISBN13: 978-0470624159
Category: Business
Subcategory: Investing
Author: Andrew Tobias,Joel Greenblatt
Language: English
Publisher: John Wiley & Sons; 1 edition (September 7, 2010)
Pages: 208 pages
ePUB size: 1110 kb
FB2 size: 1650 kb
Rating: 4.8
Votes: 140
Other Formats: mobi rtf azw rtf

This book contains a tested systematic approach to stock market investing that most people can implement on their own.

As I write this review, there are already 266 reviews of Joel Greenblatt's "The Little Book..." on Amazon. Why bother? One reason is that since first published in 2005, Greenblatt's investment accomplishments have become even more widely appreciated, giving added credibility to his advice. For example, he is featured as one of the "Hedge Fund Market Wizards" in Jack Schwager's recently published book of the same name Hedge Fund Market Wizards (please see my review of that book). Additionally, at present returns on traditional savings accounts are very close to zero and the US Treasury Note yields a mere 1.7 percent. Any of us who envisioned living in retirement from the interest on our savings were sadly mistaken. Greenblatt's investment system as presented in this book may be one of very few, or the only, approach that is likely to generate low-risk investment results that might really help savers and seniors meet their previous expectations.

The writing style is clear and simple. The author explains investment terms like return on capital and earnings yield in a conversational tone without condescention. He uses a couple of example fantasy businesses in an entertaining manner to illustrate the concepts. As the book progresses, he uses these basic examples as the foundation for more advanced concepts (not complex, but necessary). Necessary for what? For the reader to believe in the investment system that Greenblatt presents in the book to a degree that the reader will stick to the system without variance for a period of years in order to enjoy the benefits that accrue to long-term investors (think Buffett, Rogers, Graham, Bogle, Templeton).

I urge you to read the book review by "Value Investor" on these pages. He lays out the reasons why this system is very likely to perform well over a period of years. In a nutshell, it is likely to work because the author has done extensive testing of the system, uses it as the basis for his own hedge fund's portfolio management, and because it takes considerable patience and fortitude to follow (traits not found in excess on Wall Street).

One aspect that I really appreciate is the author's willingness to concede that many investors want a higher degree of involvement in selecting the stocks for their portfolios. They may be uncomfortable following a more mechanical system. He addresses this issue by giving clear guidance on how one may still follow the system even with the addition of an element of personal discretion, depending on the investor's level of expertise, time commitment and available capital.

Finally, the author maintains a free website (now for 7+ years) to aid investors with portfolio selection. This is a high value service in my opinion.

I highly recommend this book to any saver or investor, or speculator or trader for that matter, who wishes to increase their returns on investment and improve their overall portfolio performance. Five stars.
Well worth the read. As Joel points out, his formula only uses the last 12 months data. No one can really forecast the future earnings. Simple, easy to understand language and application. Excellent gift for the senior grandchildren as they begin their career (s). A helpful guide for middle age people that want to start investing for their retirement asap.
What would you say if I told you that an author had released a book claiming that he had discovered a two-step formula that would absolutely trounce the stock market?

Would you laugh? Probably. You might even say "It can't possibly be that easy!" And the thing is, normally, you'd be right. There are so many books and services selling the snake oil of easy stock market wealth that you'd be wise to ignore them.

And that should be that. Except ... except that unlike the Wade Cooks of the world, the author happens to be an investor whose fund has grown at a compound rate of 40% over the last two decades. That's the equivalent of turning $1 into $800. Not even Warren Buffett has achieved that over any 20-year period (though Berkshire Hathaway has averaged a still-bodacious 22% over its history). Not only that, but this book is based on the same core values that the author has used to seek out stocks during his investing career.

So Joel Greenblatt's new book, The Little Book That Beats the Market, is better than your run-of-the-mill "get rich quick" entry. Were that the extent of its utility, I wouldn't be wasting your time. Instead, this is a book that should be read by anyone serious about investing. And the shocking thing is, unlike the hard-to-grasp intricacies of the Benjamin Graham value-investing classics, this is a quick, entertaining read.

Greenblatt's goal was to write a book that would describe to his young children what he does for a living. Basically, his investing methods are based upon two elements: pre-tax earnings yield (the percent of the stock's price that comprises current earnings) and return on capital. Shove every company above a certain size into the transmogrifier, and it generates a list ranking companies on the combination of those attributes. Investing in the top 30 companies on these lists each year has generated an average annual return of 30.8% over the last 17 years.

Of course, here is where you say exactly what I said when I first read the book. "But this is data-mining, right?" It's pretty easy to go back in time and try a bunch of various elements until you show one that offers awesome returns, including things like investing each year on April 22 in the top 77 stocks that don't have 'e' in their names. And you'd be right, except for two things. First, and foremost, these are the only two elements that Greenblatt tried. Second, the two data points used are imminently defensible as reasonable measurements for potential investments: How much do they make? And how much do they cost?

As Greenblatt notes in the book, one of the great things about the formula is that occasionally it doesn't work.

Oh, you want me to explain why that could possibly be good? Well, one of the most hallowed truths in investing is that something that works all of the time will immediately be rendered neutral by the market. A company cannot be priced at $1 per share while earning $17. Not for long. For those who might think that Greenblatt immediately renders his magic forumla useless by writing about it, take heart. In an age of attention spans measured in seconds rather than years, the formula's occasional failure means that many investors won't stick with it.
For a very beginner basic investor many of this imformation is great. I have been investing for 2 years now and for me most of this information I have read and seen in other books I'm not saying it's not a good book but personally for me I did not get much out of it. I did like the website that goes along with the book but once again many of the stocks on the list didn't seem too upto date with online.
I'm a novice trader with some financial background who wants to get more involved in the market. This was listed on a top five books on trading list recently, so I read it over a few days on vacation. The book focuses on one model which you could stick with over a long time (while still having to actively maintain your portfolio), which is clearly explained (though it provides lots more information via footnotes if you want to delve in deeper). A wine buff once told me to focus on learning about one region, and the rest will follow. I think the same could be said about this book -- it can be enjoyed on its own, and there is plenty to learn about, but I can also see how it could be a springboard for more learning.