The Little Book That Beats The Market is a guide to value investing written by Joel Greenblatt. The book explains Greenblatt's "Magic Formula" for identifying undervalued stocks and building a portfolio that is designed to outperform the market over the long term. The book is written in a simple and straightforward style and is intended to be a user-friendly guide to investing for people who are new to the stock market or who have limited knowledge of finance and investing. It provides readers with practical tips and strategies for using the Magic Formula to identify undervalued stocks and build a portfolio that is designed to outperform the market.


5 Key Points on which Joel Greenblatt wants us to focus on

  1. The importance of value investing: Greenblatt advocates for a value investing approach, which involves buying undervalued stocks and holding them for the long term in order to maximize returns.
  2. The "Magic Formula" for investing: Greenblatt explains his "Magic Formula" for investing, which involves looking for companies that have a high earnings yield and a high return on invested capital. He argues that by following this formula, investors can identify undervalued stocks that have the potential to outperform the market over the long term.
  3. The benefits of a long-term investment approach: Greenblatt emphasizes the importance of a long-term investment approach and advises investors to hold their stocks for the long term in order to maximize returns.
  4. The importance of diversification: Greenblatt advises investors to diversify their portfolios in order to minimize risk and maximize returns.
  5. The dangers of emotional or impulsive decision-making: Greenblatt emphasizes the importance of avoiding emotional or impulsive decisions when it comes to investing, and he advises investors to carefully consider their options before making any investment decisions.

In my opinion Joel Greenblatt books is different from others books in Personal Finance domain because of the following reasons

  • A focus on value investing: One of the unique aspects of The Little Book That Beats The Market is that it focuses on a value investing approach, which involves buying undervalued stocks and holding them for the long term in order to maximize returns. This approach is different from many other books that may focus on other types of investing strategies.
  • The "Magic Formula" for investing: Greenblatt's "Magic Formula" for investing is a unique and innovative approach that involves looking for companies that have a high earnings yield and a high return on invested capital. This is a different approach than many other books that may focus on different metrics or factors when it comes to evaluating stocks.
  • Its an simple and straightforward style: The Little Book That Beats The Market is written in a simple and straightforward style that is easy to understand and follow. This makes it a good resource for people who are new to the stock market or who have limited knowledge of finance and investing.
  • Its a user-friendly guide: The Little Book That Beats The Market is intended to be a user-friendly guide to investing, and it provides readers with practical tips and strategies for using the Magic Formula to identify undervalued stocks and build a portfolio that is designed to outperform the market.
  • Its a respected and well-regarded resource: The Little Book That Beats The Market is widely respected and admired by investors and financial professionals around the world, and it is considered a valuable resource for anyone interested in personal finance and investing.