Book Review – The Little Book That Beats the Market by Joel Greenblatt


Title: The Little Book That Beats the Market
Author: Joel Greenblatt
Publish Date: November 28, 2005
# of Pages: 155
Rating: ⭐️⭐️⭐️


(From Goodreads) 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.


Joel Greenblatt’s The Little Book That Beats the Market is an easy to read financial book that discusses his magical formula for stock market picks. The beauty of this book lies in its simplicity–it’s simple enough for a teenager to understand but useful enough for adults to reread again and again.

This book was recommended to me by a dear friend who’s a bit of a financial guru himself. It’s short but sweet. Greenblatt explains his magic formula in depth and then goes into detail about why it works. While Greenblatt’s magic formula definitely requires more effort than the “buy ’em and hold ’em” approach, what he says makes a lot of sense.

So will I change my investment strategy? To be determined. Right now most of my investments are tied up in index funds within my 401k. While my 401k does not allow the freedom to choose individual stocks, I might adopt this approach when managing my children’s college funds.

Would I recommend this book to others? Absolutely. The more you understand about investments, the better you can plan for your future. Save a lot, and save early! If your company offers 401k, jump on it, and commit to saving more than the recommended percentage as soon as you’re in a position to do so.


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