The Little Book That Still Beats the Market is a book written by Joel Greenblatt, a hedge fund manager and the founder of Gotham Capital. In the book, Greenblatt introduces his "magic formula" for finding undervalued stocks and explains how it can be used to consistently outperform the market.
The book starts by discussing the importance of investing and the various ways that people can approach it. Greenblatt then introduces his magic formula, which is a quantitative approach to stock selection that involves ranking stocks based on two factors: earnings yield and return on capital. By ranking stocks based on these factors, the formula is designed to identify companies that are undervalued by the market and likely to produce strong returns. Greenblatt claims that this formula has a track record of outperforming the market over the long term, and he provides data to support this claim.
In addition to explaining the magic formula, Greenblatt also provides practical advice on how to use it to build a portfolio. He discusses the importance of diversification and risk management, and offers tips on how to implement these strategies when using the magic formula. He also covers the psychological challenges of investing and provides strategies for overcoming them, such as avoiding emotional decision making and maintaining a long-term perspective.
Overall, The Little Book That Still Beats the Market is a valuable resource for anyone interested in investing. Its focus on value investing and its emphasis on the importance of a long-term perspective make it particularly useful for those looking to build a successful investment portfolio. Whether you are a beginner or an experienced investor, this book provides a simple, straightforward approach to investing that is easy to understand and follow. It is a must-read for anyone looking to improve their investment skills and achieve long-term financial success.