THE LITTLE BOOK THAT BEATS THE MARKET (BY JOEL GREENBLATT)

As an Amazon Associate I earn from qualified purchases.

---

This is my summary of Joel Greenblatt – founder and managing partner at Gotham Capital/inventor of “The Magic Formula” – and his book: The Little Book That Beats the Market.

---

(If you sign up I earn a small commission)

---

Top 5 takeaways from Joel Greenblatt’s The Little Book that Beats the Market:
0:00 Intro
01:08 1. The Madness of the Markets
02:57 2. How Much is a Business Worth?
05:14 3. PE and Roa
08:29 4. The Magic Formula
10:23 5. Step-By-Step Instructions

---

TL;DW:
- Market prices fluctuate more than underlying business values
- It’s difficult to estimate the future earnings of a company, and therefore also what a fair price of the company would be. Most investors have no business doing this.
- PE and RoA are two of the most, if not the most, important quantitative factors to consider when buying stocks
- According to The Magic Formula, If you buy stocks with a low PE and a high RoA, you will outperform the market by a wide margin over time

---

My goal with this channel is to help you make more money and improve your personal finances. How to become a millionaire? There are many ways to get there – investing in the stock market, becoming a stock trader, doing real estate investing, or why not becoming an entrepreneur? But whether you are interested in how to invest in stocks or investing strategies for creating passive income with rental properties – I hope to be able to provide you with a solution (or at least an idea) here. Warren Buffett - the greatest investor of our time - says that you should fill your mind with competing ideas and then see what makes sense to you. This channel is about filling your mind with those ideas. And in the process – upgrading your money-making toolbox.

[rickwalgaard]

your channel is so under-rated, all the other investor pages just push their sponsored brokerage sites and try get you to trade A TON instead of the ideas and concepts you talk about. Great channel. Keep it up

[maxb]

There is one amazing book about trading: Reminiscences of a Stock Operator. What is great about this book is that it describes trading in early 1900s. A time before charts, computers and books about fundamental/technical analysis. And yet almost everything applies today. The truths which stays the same in drastically different times are one of most important truths.
would love to see summary of it on your channel

[Friedrich]

I rarely comment. While Erik's summary on Joel Greenblatt's book is spot on, the bigger context is not addressed, but in fact of utmost importance: The proposed strategy has performed significantly below average market return after it was first released. Since then an updated version of the book has been published: "The Little Book that Still Beats the Market."

[NuggetHe]

The most chill and useful channel I've come across.

[juanfernandez]

One of my favorite books of all time. Joel Greenblatt is an epic investor and I love reading all his stuff.

[rupeshchavan]

Sir bigg fan from India...
I searched all internet for knowledge regarding market but i found only 2 to 3 Genuine channels and you belong to one of them..
Thanks for sharing your knowledge and time...🙏🙏🙏

[VinayYadav-jhzu]

Hey Swedish investor, I LOVE YOUR you have given me knowledge which was missing from my entire schooling

[danguee]

The problem is that Greenblatt's method was good for a time: between 1988 and 2004, it was fantastic and returned cagr 23%. But between 2005 and 2020 it was shockingly poor and returned cagr 6% (while the S&P returned double figures).

[nono]

have listened to or read this book at least 3 times. GREAT Summary! Subscribed ! Thanks!

[engrahmed]

I was looking for these types of videos for a long time. Don't know how to thank you. Keep up the good work.

[sunnyhing]

The major flaw of "magic formula" is frequently trade stock at certain period of time. Keep chasing low PE ratio is like keep giving up growth stock.
In long run, "magic formula" may lose a lot of money in trading fees and tax.
The one of the practical advantage on Warren Buffet prefer "buy and hold" is to cut tax

[Hilee_]

God bless you Swedish Investor; would have been nice to have known your name. But your videos are so crisp, articulate and just pure value from the get go. I wish you all the happiness and success, and expressing sincere gratitude for your body of work. Just amazing

[remussirca]

You have a great and unique way to get the most juice out of these books, congratulations!
I have one suggestion for you “It’s Not About the Money”
by BRENT KESSEL

[channaholidays]

Thank you mr, swedish investor.from SRI LANKA.

[dwanew]

I’m mad that amazon was the actual company I was thinking of 😯😂

[michaelmace]

Thank you/well-done/will pass on your site to my two sons both in their 20’s..and test them..👌

[TWN]

Read the book, then saw your video. Thank you for posting. Question I have is:

#1- why would you sell *ALL* of your stocks each year - particularly the positions that are doing well?

#2 the formula is just a ranking system. If you begin with the top 20-30 stocks from the list, Rotation out of those stocks forces you to replace them with lower ranked stock, yes? What is the value? Why wouldn’t this negatively impact your returns?

[PMAtreides]

Rewatching this as I start my Venture Capital journey. I genuinely appreciated that most of your tips aren't work related, but rather life tips in the midst of it. I agree with you, that security and financial stability is important, but personal dreams and ambitions do matter greatly in the long run. Hopefully my heart is in this industry as much as I think it actually is HAHHAHA

[yunuse.]

This is the greatest investing channel i have ever seen. I have subscribed and started to watch all the videos! I would like to meet you one day great man!

[aHunnedBandz]

The perfect ad placement. Never seen it done!