The Little Book That Beats the Market (Little Books. Big Profits) | 
 enlarge | Author: Joel Greenblatt
Publisher: Wiley
Category: Book
List Price: $19.95
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Rating:  203 reviews
Sales Rank: 9215
Media: Hardcover
Pages: 176
Number Of Items: 1
Shipping Weight (lbs): 0.6
Dimensions (in): 7.1 x 5.4 x 0.9
ISBN: 0471733067
Dewey Decimal Number: 332.63228
EAN: 9780471733065
ASIN: 0471733067
Publication Date: November 19, 2005
Availability: Usually ships in 1-2 business days
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Condition: We ship daily with delivery confirmation from NYC.
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Product Description
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.
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| Customer Reviews: Read 198 more reviews...
Great book, well explained, a little repetitive December 2, 2008
P. Mendes (Dayton, OH USA)
This book can be read by teenagers, as well as people with little education. It explains everything with a simple example, and it repeats the main message across the sections to help you memorize. Because of these same reasons, it reads very slowly and may make you tired of its pace.
However, it provides a summary section in the end of every chapter that allows you to quickly get a gist. Later chapters actually have more detailed contents.
I recommend it if you know nothing about investing, as well as to give to your kids.
 Great Book to start learning about investing November 29, 2008
J. Pagnanella (New York)
First book I ever read about the market. Very simple and to the point. Great place to start your reading about investing.
Great Reading for People Contemplating Value Investing October 24, 2008
T. Temple (Northern IL United States)
Great info with a humorous touch and a link to data to use in applying what you learn. I am not going to apply it until a more normal market comes along though.
 Simplistic, Good Explanation of Basic Concepts for Novice Investors September 18, 2008
Patrick S. Pope (Chicago, IL)
0 out of 2 found this review helpful
This brief text is a good read for the novice investor who wants to learn more about equity valuation. Basically, it distills the drivers of stock values into two components: return on assets and earnings yield. Buy stocks with strong numbers in both of these categories and, over time, you will outperform the market. Only problem with this approach is that stock values are based on expectations of FUTURE performance. Stocks often have high earnings yields today because professional stock pickers expect their finances to degrade in the future. Forecasting future performance is what is most important. The author fails to stress this concept.
For the novice investor, the author is able to explain some of the more fundamental concepts of equity valuation in a straightforward manner. Yet, this text would be only one of a several books someone should read before trading individual stocks instead of purchasing mutual funds.
 Reviewers need a lesson in reading comprehension March 27, 2008
Investing Truth
2 out of 2 found this review helpful
I read every chapter of this book while at Borders except the last one, so I cannot vouch for the effectiveness of the "Magic Formula" website that seems to generate so much controversy. I can, however, clarify a glaring misconception in what Goldblatt wrote in his book.
Contrary to what many of the reviewers wrote (especially the negative reviewers), Goldblatt was not insisting that people focus only on Return on Assets and P/E ratio. Goldblatt was also not insisting on a definition of "capital" (within his concept of "return on capital")that leads to an over-emphasis on services over manufacturing. He illustrated perfectly his two pieces of investment data in the following ways:
First, Return on Capital can be best interpreted as a return on invested capital. If it costs $1 million to build a retail store and that store, within a year, generates $2 million, then the ROC is 100%.
Second, his other measure is really a profit-yield per share. You get this measure by taking the amount of profit generated by a firm, dividing it by the number of shares outstanding, and then dividing that by the share price times 100. So, if a company has a $1 million profit and it's selling a million shares for $10 a share, then the profit-yield per share is 10%.
These two concepts seem to form the core of value investing in that they discipline a person to invest in the market as if they were buying a business or a partnership share in the business. The relevant question in any such investment is always "how much will my partnership share make?"
All other factors are just risk management.
The trick is finding data to generate these statistics. I don't know how well Goldblatt's website does that.
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