The Little Book That Beats the Market

by Joel Greenblatt

Overview

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 explains it using 6th grade math, plain language and humor. You'll learn how to use this low risk method to beat the market and professional managers by a wide margin. You'll also learn how to view the stock market, why success eludes almost all individual and professional investors, and why the formula will continue to work even after everyone "knows" it.

Product Details

ISBN-13:	9780470893661
Publisher:	Wiley
Publication date:	06/03/2010
Series:	Little Books. Big Profits , #9
Sold by:	JOHN WILEY & SONS
Format:	eBook
Pages:	176
File size:	378 KB

About the Author

JOEL GREENBLATT is the founder and a managing partner of Gotham Capital, a private investment partnership that has achieved 40% annualized returns since its inception in 1985. He is a professor on the adjunct faculty of Columbia Business School, the former chairman of the board of a Fortune 500 company, the cofounder of ValueInvestorsClub.com, and the author of You Can Be a Stock Market Genius. Greenblatt holds a BS and an MBA from the Wharton School.

Read an Excerpt

Introduction

This book was originally inspired by my desire to give each of my five children a gift. I figured if I could teach them how to make money for themselves, then I would be giving them a great gift -- truly one that would keep giving. I also figured that if I could explain how to make money in terms that even my kids could understand (the ones already in sixth and eighth grades, anyway), then I could pretty much teach anyone how to be a successful stock market investor.

While the concepts covered in this book may seem simple -- perhaps too simple for sophisticated investors -- each step along the way is there for a reason. Stay with it, and I assure you the payoff for both beginning and experienced investors will be huge.

After more than 25 years of investing professionally and after 9 years of teaching at an Ivy League business school, I am convinced of at least two things:

1. If you really want to "beat the market," most professionals and academics can't help you, and
2. That leaves only one real alternative: You must do it yourself.

Luckily, that might not be such a bad thing. As improbable as it may seem, you can learn to beat the market. Through a simple, step-by-step process, this book can teach you how. To help you along, I have included a magic formula. The formula is simple, it makes perfect sense, and with it, you can beat the market, the professionals, and the academics by a wide margin. And you can do it with low risk. The formula has worked for many years and will continue to work even after everyone knows it. Although the formula is easy to use and will not take much of your time, it will work for you only if you make the effort to fully understand why it works.

Along the way, you will learn:

• How to view the stock market
• Why success eludes almost all individual and professional investors
• How to find good companies at bargain prices
• How you can beat the market all by yourself

I have included an Appendix section for those of you with a higher level of financial training, but it is not necessary for people to read or understand the appendixes to be able to understand and apply the methods found in this book. The truth is that you don't need an MBA to beat the market. Knowing lots of sophisticated formulas or financial terms isn't what makes the difference. Understanding the simple concepts in this book ... is.

So please enjoy this gift. May the small investment of time (and 20 bucks or so) greatly enrich your future. Good luck.

Table of Contents

Acknowledgments.

Foreword.

Introduction.

Chapter One.

Chapter Two.

Chapter Three.

Chapter Four.

Chapter Five.

Chapter Six.

Chapter Seven.

Chapter Eight.

Chapter Nine.

Chapter Ten.

Chapter Eleven.

Chapter Twelve.

Chapter Thirteen.

Step-by-Step Instructions.

Appendix.

Editorial Reviews

It's hard to overstate the simplicity of hedge fund manager Joel Greenblatt's stock-picking strategy -- or the wry, this-won't-hurt-a-bit style with which he explains it. Even better, for those of us too lazy (or nervous) to use his basic formula on our own, Greenblatt supplies a web site, currently free, that selects market-beating stocks for you. You may have officially run out of excuses for not becoming wealthy.

bn.com

One of the best, clearest guides to value investing out there. I have some minor quibbles, but in a world where individual-investor advice is dominated by jargon-filled short-termism on the one hand and oversimplification on the other, Mr. Greenblatt's approach is valuable.

The Wall Street Journal