The Little Book that Beats the Market

By Joel Greenblatt

Original Publication Date2005 (updated 2016)
TopicsValue Investing
Similar TitlesSee author's other works
Works from Same AuthorCommon Sense, You Can Be a Stock Market Genius,The Big Secret for Small Investors

A short review for a short book.

For the reader who is unfamiliar with value investing this book is an excellent starting place. It concise and practical; simple in it’s delivery, supported by good data and written by an industry heavyweight. In addition to this, the author provides implementation solutions (for free!) for those that want to try it out.

The book is centered around the concept of a “Magic Formula” for investing with the majority of the text dedicated to simple demonstrations of the concepts – “informative fluff” in some sense, but an enjoyable read.

The magic formula itself focuses on finding companies with high “return on capital” and high “earnings yield”, which is a fancy way of saying: buy efficient / productive companies at attractive prices. In the way that Greenblatt lays it out, it really is that simple.

Diligently applied, I’m quite confident that the methodology laid out in the book will provide attractive results in the long-term, however, readers take note: KNOWING is not the same as DOING and my gut tells me that this methodology is probably quite difficult to follow for most people. To me, it’s kind of like fitness / weight loss… the steps are pretty simple and understood by most: Eat less, move more. Easy to KNOW, but much more difficult to DO – and also easy to over-complicate.

A great book for anybody looking for an introduction to value and a small time commitment too. Highly recommended.