Why It Ranks #73
The simplest effective investment strategy ever published. Greenblatt proved that you do not need to be a genius to beat the market — you need a systematic approach and the discipline to follow it.
The Review
Joel Greenblatt distilled value investing into a simple formula he calls the 'Magic Formula' — rank stocks by earnings yield and return on capital, buy the top-ranked ones, and rebalance annually. The Little Book That Still Beats the Market proves with decades of data that this mechanical approach beats the S&P 500 by a wide margin. The book is written so simply that a teenager could follow the strategy, which is exactly what Greenblatt intended.
Key Takeaways
- 1The Magic Formula: rank by earnings yield + return on capital, buy the top 20-30 stocks
- 2The strategy works because it systematically buys good companies at cheap prices
- 3Discipline matters more than brilliance — the formula works, but only if you stick with it through bad years
- 4Individual investors can beat the market with a simple mechanical strategy and no stock-picking skill
Fun Facts
- •Greenblatt originally wrote the book to explain investing to his children
- •The free website magicformulainvesting.com lets you screen stocks using the formula
- •The updated 2010 edition added five more years of data confirming the strategy works
Book Details
The Little Book That Still Beats the Market by Joel Greenblatt
Pages
208
Goodreads Rating
4.09/5
Copies Sold
500K+
First Published
2005
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