Mar 302006
 

I try to keep reviews to a minimum around here, instead opting to write about whatever comes to mind or interests me. And I will try to honour that. At least in the respect that a review gives you actual information about the reviewed object.

"The Little Book That Beats The Market" By Joel Greenblatt is one of the most magnificent books I have ever read. It’s written so that it is easy to understand, simple and concise. It’s also tiny. I read it inside of a few hours. It is also very cheap for the wisdom contained within it.

Essentially, he outlines a stock strategy of owning great (profitable business) at cheap prices. What will happen is that everyone else will reason that these great businesses are great and the prices will rise to match that realization. Then, you sell your stocks for a tidy profit. If that confused you, then this book is for you. It is very, very, very, very clear and easy to read.

Now, you can get more information (without buying the book) at:

http://www.magicformulainvesting.com/

Specifically, click on the FAQ for more info.

Sign up. Put in a market cap (try 1) and then just:

"In general, purchase 5 to 7 top ranked
stocks every 2 months or 7 to 9 top ranked stocks every 3 months. After
9 or 10 months, this should result in a portfolio of 20 to 30 stocks.
Sell each stock after holding for one year (for taxable accounts refer
to Step-by-step section of the book) and replace with a new pick.
Remember, maintaining a diversified portfolio over a long period of
time is an integral part of the Magic Formula strategy."

The "magic formula" is Greenblatt just kidding around. It’s been known for some time to value investors and they’ve used these sorta things with large success.

If you’re good at valuation, you may consider filtering through the list from the site to a handful of stocks as I will be trying to do, so that I have to buy fewer choice stocks. You may go ahead and buy the full 20-30 stocks.

Conclusion: Buy this book. Borrow it. Steal it. I don’t care how you get it. Procure it
and read it and then follow the strategies he outlines and get friggin
rich. Go ahead, do it, get rich. I dare you to get it.

I know that most (if anyone) who reads this blog is young. That means that most of us have a damn good shot at living past 70. Long-term wealth creation is the way to making sure your retirement goes smoothly, as well as every other part of your life. If you start saving and investing in your fifties, you’re basically investing for retirement. But if you start NOW, you’re investing and gaining for the next few years. Meaning your 20s and 30s will be comfortable, which is still the prime of your lives. A little sacrifice now can mean comfort for the rest of your lives.

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