The Little Book That Still Beats the Market

Joel Greenblatt

4.2 - 5 ratings

List Points

sten

Chapters

Exam

Topics

Description

Joel Greenblatt's book aims to demystify the seemingly complex world of investing by introducing a simple, systematic approach to stock market investing that can be used by anyone. Through a method he calls the 'Magic Formula,' Greenblatt illustrates how investors can consistently determine and invest in undervalued companies with high returns on capital, thereby 'beating the market' over the long term. The book explains key financial concepts in an accessible manner and provides practical advice for implementing the strategy, making it an essential read for both novice and seasoned investors seeking to improve their investment performance.

What will you learn?

By reading this book, you will learn about Joel Greenblatt's 'magic formula' for investing, which simplifies the stock-picking process into a methodical and disciplined approach. It outlines how to systematically identify undervalued companies that also demonstrate a high return on capital, which are likely to outperform the market. The book breaks down complex financial concepts into easy-to-understand language, providing both novice and experienced investors with practical insights and step-by-step guidance on how to apply the magic formula to build a profitable investment portfolio.

Who’s it for?

• Novice investors seeking fundamental insights into stock market investing.

• Experienced investors looking for a simplified explanation of market-beating strategies.

• Financial advisors who want to incorporate proven methods into their client strategies.

• Students of finance and business aiming to understand practical applications of financial theory.

• Readers interested in value investing and long-term wealth accumulation.

Key Learning

Available chapters to listen for this topic

1
Introduction to the Concept of the Magic Formula
Understanding the basic principles behind the magic formula, the key metrics of earnings yield, and return on capital, and how these metrics identify undervalued and high-performing stocks.
2
The Importance of Buying Good Companies at Bargain Prices
Exploring the rationale for selecting high-quality companies available at discounted prices and how this strategy outperforms the market over time.
3
How the Magic Formula Works to Rank Stocks
A detailed look at the step-by-step process for ranking stocks based on their earnings yield and return on capital to identify attractive investment opportunities.
4
The Role of Patience and Discipline in Investing
Examining the necessity of a long-term perspective, patience, and discipline when using the magic formula to navigate market volatility and achieve superior returns.
5
Understanding Market Inefficiencies and Behavioral Biases
Discussing how market inefficiencies and common investor behavioral biases create opportunities for the magic formula to exploit and generate excess returns.
6
The Step-by-Step Process to Implement the Magic Formula
A practical guide to executing the magic formula investment strategy, including the selection process, rebalancing, and maintenance of the portfolio.
7
The Benefits of a Simple, Rule-Based Strategy
Highlighting the advantages of using a straightforward, rule-based approach to investing that minimizes emotional decision-making and enhances consistency.
8
Risks and Limitations of the Magic Formula
Identifying the potential risks, drawbacks, and limitations of the magic formula strategy and how to mitigate them through diversification and proper portfolio management.
9
Real-World Examples and Case Studies
Analyzing historical case studies and real-world examples that demonstrate the effectiveness and reliability of the magic formula in different market conditions.
10
Your Personal Investing Journey with the Magic Formula
Encouraging readers to apply the concepts learned, develop their personalized investment strategies, and commit to continuous learning and improvement using the magic formula approach.