Review – The little book that still beats the market?

The Little Book That Still Beats the Market (Little Books. Big Profits)

If you haven’t read The Little Book That Still Beats the Market (Little Books. Big Profits) then you have missed a masterpiece by a great academic, investor and writer. Joel Greenblatt is an adjunct professor at the Columbia University graduate school of business. He is a value investor in nature, and his passion for value investing led him to co-found the “Value Investors Club” with John Petry.

This book is also part of highly popular the “Little books big profits” series. I will write reviews on many books from this series, because I found them to be excellent. These small books can compress a treasure load of information advice in a concise format. Like they say, small can be big as well.

I usually recommend this book to almost any investor or potential investor. I do that because the book is a very easy read. I also have a sentimental reason for recommending the book. When I first joined Caravel Management LLC in 2009 my boss and mentor, M. Caglar Somek sent me this book to read from USA to Bangladesh via Fedex.

The book basically uses simple language in explaining what the stock market is and why it goes up and down. Greenblatt does a great job at using Benjamin Graham’s concept of Mister Market, about why stocks might get overvalued or undervalued at times. The rest of the book touches upon key concepts like price multiples and return on capital. Finally, the book introduces Greenblatt’s ‘magic formula investing’. Personally  I do not endorse any sort of formula based investing because any alpha it generates will ultimately erode over time. Nevertheless, Greenblatt’s track record with this formula based investing is quite phenomenal.

If you were to read one single book on the stock market I would highly recommend that it’s one.

Asif Khan, CFA

Asif Khan is presently a Research Analyst (Financial Sector) for Exotix which is a frontier market focused investment bank. He has more than 6 years of work experience as equity analyst in both buy and sell side roles across Asian frontier markets. Asif is a CFA Charterholder and has a dual major in Finance & Economics from North South University.

8 thoughts on “Review – The little book that still beats the market?

  1. Bhaiya, is this book available in Bangladesh…..usually this type of books are quite rare in our country. I was actually looking for a book regarding investment for a long time…..but no one was able to suggest me a good one…..

  2. I don’t know why I can’t find good investing books in Bangladesh. I couldn’t find The Intelligent Investor (Found one in India, but it was 3000 rupees), so I read it online and I plan on doing the same with Securities Analysis. I am currently reading Margin of Safety, Risk Averse Investing Strategies for the Thoughtful Investor by Seth Klarman.

    One question, what are your thoughts on the Magic Formula Investing? Do you rely on it often? Just curious.

    1. I am trying to locate some book store owners in Dhaka and will encourage them to get these books. Some of these books can be quite pricey.

      As for the magic formula, I am not exactly a fan of it. I am a firm believer of the fact that success does not come without hard work most of the times. The rest of the times I would rather not take a chance. So my method of investment is based on tons of due diligence and analysis.

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