The Little Book That Beats the Market
by Joel Greenblatt · first published 2005
88% recommend13% neutral
Why HN recommends it
A short, approachable primer on the magic formula for picking stocks, built on the core idea of buying cheap and good companies. It is a quick first read for beginning investors.
Summarised by Claude from recommending comments
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
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I agree with your point completely. However, on the magic formula bit, I do highly reccomend beginning investors read Joel Greenblatt's book,"The Little Book that Beats the Market", in which he outlines the "magic formula". www.magicformulainvesting.com is the associated website with it. The magic formula basically sorts the US public investing universe by return on capital (EBIT…
on “How you can do it alone as a solo entrepreneur” ↗…much cash the business requires in the form of working capital and on-going maintenance capex vs growth capex. I would suggest googling Warren Buffett's primer on look through earnings. Greenblatt's "Little Book that Beats the Market" can also be read quickly.
on “Ask HN: What's the most valuable thing you can learn in an hour?” ↗…without an actual cash flow is controversial right now but it's a mix of a virtual land grab and currency speculation. a couple resources: The Intelligent Investor -Ben Graham (Buffett's Bible) The Little Book that beats the Market -Greenblatt intangibles regarding wealth: The Algebra of Wealth -Galloway https://www.youtube.com/watch?v=uNrjrDV9-YQ Oh and investopedia has a neat stock simulator if you want to speculate
on “Ask HN: How do you invest your money? Is it too late for small time investors?” ↗"The Little Book That Beats The Market", by Joel Greenblatt. Why? Because hopefully it will get you interested in saving and investing.
on “Ask HN: What book should I buy for my 18th birthday?” ↗…easy to prove though. 2 of my favorites on this topic: Warren Buffet's "The superinvestors of Graham-and-Doddsville" - https://www8.gsb.columbia.edu/sites/valueinvesting/files/fil... Joel Greenblatt "Little book that beats the Market" - https://www.magicformulainvesting.com/Home/AboutTheBook
on “Ask HN: Have any of you had success trading the stock market?” ↗…based on these metrics, rather than just index funds, you can blend aspects of passive and active investing. This is called "smart beta" and is an interesting emerging strategy A good primer is "the little book that beats the market". The strategy is to buy "cheap and good" stocks and just hold them. Cheap is defined by high EBIT / EV (lots of earning power per unit of capital) and good by high ROIC (the business can turn money…
on “The Meaninglessness of the Stock Market Index in a Digital World” ↗…membership), also interviews/Berkshire investor days with Buffet and Munger on youtube. In terms of the classic resources you have "The Intelligent Investor", "One Up on Wall Street", "Security Analysis", "The Little Book that Beats the Market", etc. Please be mindful that this option is a long journey with lots of reading, making mistakes that results in "paying tuition to the market", and not for those who can't control their emotions when…
on “Ask HN: What are your best and safest investment options?” ↗…one: “Choosing individual stocks without any idea of what you're looking for is like running through a dynamite factory with a burning match. You may live, but you're still an idiot.” This is from "The Little Book That Beats The Market" What is your favorite investing quote?
on “Best Investing Books for Beginners in 2021” ↗