Title: The Little Book That Beats the Market.
Author: Joel Greenblatt.
Year of Publication: 2005.
Synopsis: "The Little Book That Beats the Market," written by Joel Greenblatt and published in 2005, presents a simple and systematic investment strategy designed to help individual investors achieve market-beating returns.
Greenblatt introduces the "Magic Formula," which combines two fundamental financial metrics: a company's earnings yield and its return on capital. By ranking stocks based on these metrics, investors can identify potentially undervalued companies with strong earning potential and efficient use of capital.
The book explains the Magic Formula's principles in detail, emphasizing its quantitative and rules-based nature. Greenblatt provides insights into the strategy's historical performance and its application to different market conditions.
While acknowledging the simplicity of the approach, Greenblatt also addresses potential challenges and the importance of patience and discipline in following the strategy over the long term.
"The Little Book That Beats the Market" offers a straightforward and accessible introduction to a value-based investment strategy. It provides readers with a practical framework for identifying investment opportunities, making it a valuable resource for those seeking a methodical approach to stock selection and long-term wealth creation.
