The Little Book That Still Beats the Market (Little Books. Big Profits)

At 80, I have just discovered this book and enjoyed it more than any other book I've read (well, at least more than any book I REMEMBER reading). The book starts slow, as if to disguise how good it really is. By chapter 6 I was laughing out loud, at the statistical simplicity, shear elegance, and ironic effectiveness of this investment approach. I've a masters in general experimental psychology and have taught graduate level statistics, so I have some background from which to reasonably allege that this is a great book. Don't miss it. Don't let the negative reviews dissuade you. This is a sincere book written by an obvious expert who has the humility to acknowledge the well established fact that most investment advisors can't beat the market. He's come up with a simple method that works, tested it, and is sharing it. You probably won't do better than this. Yet of course you probably will think you can. Which is what makes this so much fun. Is it statistics, investing advice, psychology, or zen? Just read it - and if you do, don't miss the depth that's disguised with simplicity. Don't miss the irony of a guy who wrote this to explain why you probably can't do any better than this who then spends his career managing investment funds. And writing more books. If you don't think THAT is humor, rate yourself dull normal at best! Enjoy. If you don't enjoy this book, feel free to write a scathing review of this review!

This book is great, I have been investing for a while and was always looking for growth stocks etc. but after reading this I saw the power of long term value investing. I am not giving up on some other strategies and the book doesn't demand anything like that it just presents a strong case in the clearest terms possible for value investing. I also liked how the book was very enjoyable to read and written in engaging humorous language. The book does not require any prior investing knowledge and actually expects you to not know anything and still be able to make excellent returns. There is however an element of belief required to implement his exact system but the fundamental ideas are very clearly explained.

Ok so two things need to be taken into consideration prior to reading this review. 1. I've been a customer on Amazon (and customer of many retail stores) for many years now and purchased over 100's (probably thousands) of items, many in which I love! And have never ever felt the need to leave a review for. 2. If I think this book is so amazing why haven't I given it 5 stars, why not 4? Well for starters I'm a novice investor. By novice I mean 2 months worth of experience in the actual stock market lol not including 2 year's of investing in the acorns app (which after fees I walked out with an extra $50). While that might seem like a horrible investment please keep in mind I had a little over $700 in the account, so about a 7% return and acorns is a mobile app. Some how I knew I could do much better than that investing in the stock market myself. It was always something I've been interested in for year's now. However like most people, the idea of losing all my hard earned money has put a damper into that interest. But after seeing the possible returns I could make I told myself investing in it myself could be even more rewarding in the end. So I'm assuming like everyone who purchased this book, I wanted to start gaining knowledge about the stock market. So I purchased a few books. One being a investing 101 book written by a CPA. Then I went ahead and researched the greatest books on investing and came across Benjamin Graham's book "The intelligent investor" which I purchased. Bought myself a book to teach me on how to read a balance sheet and other financial statements so that I'd be able to learn how to read a companies health. With the thirst for more knowledge I kept picking up more books which brings me to this one "The little book that still beats the stock market" and i love it so much that after year's of never reviewing anything I felt the need to actually write a review. But the author of this book truly simplified everything I've read up until this part. That's why it's so important you understand that I'm still a novice investor, someone with only 2 months of experience in the stock market on my own. This author not only wrote this book as if he were talking to adults, but also as if he was talking to his children. So he literally wrote this in a way that most if not all people could truly understand. And with the knowledge I had gained from those other books I've read in the past (but was somewhat confused by because of the literature and lack of experience or knowledge in investing) this book truly clarified everything and put it in a wider perspective that I could actually grasp hitting on every key thing the other books had mentioned (even referencing the greatest book in investing by Benjamin Graham) already in a more simplified and fun way. I say fun because apparently this author is a comedian literally joking his way throughout the entire book keeping me entertained and never losing focus of actually learning what he's teaching. I'm really impressed by this book because as a beginner in investing I feel that this book along with everything I've learned with the others had given me the courage and understanding to know what to look for and how to look for them when it comes to stocks or index funds and even bonds. Now on to the reason why I gave it 4 stars and not 5. I consider myself a realist and throughout the entire book the author mentions this system in which he calls the "magic formula" which picks out the greatest stocks at under value Price's. I've yet to try his formula and therefore can't give it 5 stars, but I definitely will and believe that how he goes about making this formula puts Warren Buffett's and his mentor Benjamin Graham's formula in a more simplified way for everyone to understand even those who don't have a bachelor's degree.

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.

This book was fun to read, since the author has a good sense of humor. It is well explained and clear step by step guide is provided.

Great book. Highly recommended. Unfortunately, I ordered from Amazon and they sold and delivered a water damaged book as “new.” Buyer beware. Amazon apparently doesnt have the best qc.

It's a very easy read. The author makes a lot of good points about value investing and talks almost solely about his personal strategy and backs it with data that his research team has come up with. I will not be using his exact strategy to create a portfolio of my own, but he has a lot of great points and advice for beginner investors. I believe in fundamental analysis over technical and this strategy implements fundamental analysis and again, gives easy to understand examples and advice. The book is super short. Took me just a few hours to read. It's also super cheesy. The author tries to make it funny and fun but it's just a little too much. With quirky little anecdotes every few sentences surrounded by (). It annoyed the heck out of me for the first few chapters. I'd say it's worth the read if you're a beginner investor or interested in different strategies.

The "Little Book That Beats the Market" is a short, digestible book that outlines Joel Greenblatt's "magical formula investing" theory. What is the magical formula? Comprised of two simple metrics (return on capital and earnings yield), the magical formula is an investment-screening tool designed to identify companies with better than average earning power that are for sale at a lower than average price (i.e. ones that present a "value" buying opportunity). The formula is in many ways a distillation of the teachings of Benjamin Graham (whose ideas influenced Warren Buffet) into a more populist and palatable form. To determine what companies are better than average, Mr. Greenblatt uses a "return on capital" metric. To gauge attractiveness of price, Greenblatt looks at "earning yield". The Appendix of the book outlines how it is he calculates both of these metrics. The magic formula then screens for the 20-30 stocks that have the highest ranking, when you look at all the stocks combined return on capital and earnings yield. If these concepts are new to you, Greenblatt goes so far as to even show the results of this screen on an ongoing basis on his Magic Formula website. For a more experienced investor, for someone who has read books on investing (and particularly those on value investing- Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor , The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) , The Essays of Warren Buffett: Lessons for Corporate America, Second Edition , Value Investing: Tools and Techniques for Intelligent Investment , even Joel Greenblatt's You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits ), this book will not seem the best of use of time. This is an "introduction to investing" type book. Which is not to say, the ideas of this book are not important, but only that for the more experienced students of investing, this review combined with a look at Greenblatt's Magic Formula website and maybe the Appendix of this book would be enough to get the essence of the "Little Book" without having to read it in its entirety. Mr. Greenblatt's investing concept of "magic formula investing" while simple has held up well over time. Why? The formula's difficulty is not in its construction, but rather in its implementation. What makes the prevalence of these value opportunities possible is the very human nature and institutional constraints that make them difficult to implement. To help with this, Mr. Greenblatt and colleagues have now made their investment theory "investable" through either self-directed or professionally managed accounts. The funds have been available since 2009. The verdict? They are up until now beating the market. For an introduction to a simple but effective investment approach that seems to perform well over time, this book- readable in an afternoon's sitting- is worth a glance. For more experienced investors, spending thirty minutes on the Internet will probably get you to the same place.

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I first read this six years ago and I've re-read it roughly one a year since. In my view this is an investment classic. His target audience is his teenage children, and he's a wickedly funny writer - so the book is an easy read. For a technical book, that's quite an achievement. He starts out by explaining the basics of safe investing - banks accounts and government bonds. Then he moves into riskier investing in businesses via the stock market. He gives a great explanation of how a business works, via the fictional "Jason's Gum Shops" and "Just Broccoli". While doing that, he explains what the key fundamental data means e.g. sales, cost of sales, earnings, income. We're eased into the technicalities by reading the story. Ben Graham's "Mr Market" and "margin of safety" then make an appearance, placing Greenblatt firmly in the value investing camp. But he explains that value investing isn't easy, and you're up against finance professionals. He's come up with a "Magic Formula" for us to use. It's been heavily and successfully back tested. Yet in concept it's very simple: a) Find the earnings yield of companies, and sort them from highest to lowest. Give the best score of 1, the next a score of 2, and so on. This searches for the best bargains. b) Find the return on assets for the same companies, and create a new list sorted by ROA. Again, give them scores, 1 for the best, etc. This searches for great companies. c) Add these two numbers together to get the company's magic formula score. This gives great companies at relatively cheap prices. d) Buy the top 30 companies. This creates a portfolio, to minimise risk. e) Sell them after 12 months, and repeat. I forward tested it back in 2010, reviewing the results a year later. Some companies did badly, some extraordinarily well - as Greenblatt predicted. The key was the portfolio did well. It did slightly better than the S&P 500. I noticed that some of the performance was driven by two or three companies which were taken over. I've repeated the exercise in following years, when it also did well. It's easy to find US companies which fit the bill - he shows you on his website. For UK stocks, you can get them via the "ShareScope" app. If you're into value investing, you should take a look at this book. If you want your children to understand the stock market and invest for their future, you can't go wrong with this.

If you only get one book about finance make it this one. Excellent writing that’s easy to understand. If you were to get another book, I’d highly recommend A Random Walk Down Wall Street. Super book as well. Enjoy.

Didn’t reach the expectations

A must read for any serious investor.