Book Review – The Little Book That Beats The Market (Week 4 of 52 Books in 52 Weeks Challenge)

The Little Book That Beats The Market by Joel Greenblatt

This week I read Joel Greenblatt’s The Little Book That Beats The Market. This is a great book for those that don’t anything about financial markets or investing. It’s also great for college students who have taken those basic financial courses but haven’t really thought about how they could apply those lessons they learned in Investment Analysis and Business Finance to their own lives.

Greenblatt does a fantastic job of taking complex topics and relating them in very simple terms so that anyone could understand. He uses simple stories involving himself teaching his children simple concepts in finance as a way of showing that even children can understand certain concepts involved in valuing companies and buying stocks.

And the best part? This book is ridiculously fast and easy to read. I read it in one afternoon. No reason you can’t finish this one in a week!

So what does Greenblatt cover really? Well basically everything. He gives you a broad overview of stocks, bonds, valuations, and his own “Magic Formula” for picking the best stocks to invest in. Wait a second, Greenblatt gives you a Magic Formula to beat out professionals at investing? It’s actually true. So why do professionals and hedge fund managers not use this strategy? Professionals and hedge fund managers often have certain marks they must maintain and meet on a monthly basis, so they can’t plan for super long growth portfolios. They need to ensure their portfolios will be more stable. Greenblatt’s strategy can have several down months in a row and when this happens, many investors question it and get out. If they would stick it for years, Greenblatt’s strategy suggests that they would turn things around and see better growth than ever.

And his formula isn’t complicated to understand. In fact most if it is down online at Greenblatt’s own website (or at least it provides an excellent starting point).

Considered “one of the best investment books of the last 50 years” by legendary investor Michael Price. Definitely pick it up.


About Jason Willis
Jason graduated from the University of Central Florida in the fall of 2011 with a B.S.B.A. in Finance. He currently works at The Newport Group as an Investment Analyst on the Asset & Liability Management Team working with Non Qualified Deferred Compensation Plans. In his spare time he continues to give back to AKPsi by assisting with the CFAC and NX Chapter at UCF. He also currently operates his own blog entitled Professional Hedging, and is also preparing to acquire his Series 7 and 66 Certifications.

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