WILEY The Little Book That Beats the Market

Tout à fait judicieux comme livre-conseil... faites vos devoirs et n'investissez pas à l'aveuglette en ne suivant que le livre... principes de base géniaux...

Libro interessante

A great, quick read good for learning or recapping the basics.The magic formula while probably successful may not be for everyone.

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As a near novice in most things to do with the stock market, I've been on the lookout for a book that would provide a very simple overview and the best investment strategy. Greenblatt's Little Book That Beats The Market caught my eye, but I was skeptical, having read Andrew Tobias' famous book, The Only Investment Guide You'll Ever Need. Tobias' book argued that most ordinary investors can't expect to beat the market, and should therefore invest in the stock market as a whole, by investing in a no-load, broad-based index fund with a company like Vanguard. Tobias pointed out in the 2005 edition of The Only Investment Guide that broadly based index funds tracking the whole market outperform 90% of stock managers and often charge much lower fees.But lo, now Tobias, treasurer of the Democratic Party, in the forward he has written to The Little Book That Beats the Market, has stopped singing the virtues of mere broad-based index funds, and has dropped his general skepticism about beating the market as a whole. Tobias tells us Greenblatt knows what he's talking about when Greenblatt claims there is a very easy way to strongly beat the market over the long term. Tobias in the forward to the book even urges Vanguard to set up a market-beating fund based on Greenblatt's "magic formula," and writes that the next edition of The Only Investment Guide You'll Ever Need will steal very liberally from Greenblatt's Little Book That Beats the Market.Greenblatt's book is so clear and easy that most teenagers can understand it. Greenblatt even has a website that allows one for free to instantly find, in terms of his magic formula, the top 25 and top 50 stocks out of some 3,500 on the market. He then has a very simple seven step system (requiring no stock research) showing you how, in a few minutes every few months, you should purchase and sell stocks, in order to get returns that very strongly beat the stock market as a whole. He also offers proof in the book that his magic formula works: he shows for example how using it over the 17 years from 1988 to 2004 would have provided returns of over 30 percent per year on average.If just any fool were pushing this strategy, I'd ignore it. But since Andrew Tobias is supporting it, and since Greenblatt himself has gotten 40% to 50% returns for many years, it looks like his presentation should be taken seriously. (You can't expect 40% to 50% returns with this simple method though; Greenblatt, in his own investing work, only uses the simple "magic formula" approach to stocks as one of many inputs and does a lot of additional research the average investor has no time for. But Greenblatt's testing of the simple, easy, magic formula presented in The Little Book That Beats The Market suggests it can generate market-thrashing 20% to 30% average annual returns over the long term, still extremely good.)I should comment on some details in the book's appendix, which you won't need to understand to grasp Greenblatt's simple book. An earlier reader-review of the book mistakenly complains that Greenblatt's so-called magic formula is not interesting because it is based on earnings to price ratio (E/P) of companies and the return on assets (ROA) ratio of companies. But if that reviewer had read Greenblatt's book more carefully, he would have seen that Greenblatt's formula does not use E/P and ROA. Instead of E/P, Greenblatt uses earnings before interest and taxes (EBIT) divided by Enterprise Value (EV). And instead of ROA, Greenblatt uses EBIT divided by tangible capital employed ("tangible capital employed" means net working capital plus net fixed assets). Companies that have the best combined rankings in EBIT/EV and EBIT/tangible capital employed are at the top of the magical formula investment rankings of companies.The same reviewer complains that Greenblatt wasted some pages on inessential verbiage and could have compressed his whole message into an even smaller book. Well, there is something to that complaint, but the book is already very short and takes only about two hours to read as is. Even then, when I first picked it up, I found it easy to skim quickly through the entertaining chatty stuff and get to the beef, so it took me perhaps an hour to get through the book and get the gist. I am now rereading it carefully, since I plan to invest using its strategies, though first I intend to look for any expert critical reviews that may have been written of the book. But with people like Tobias strongly backing it, and Greenblatt's brilliant investment track record over the years, I'm gung ho at this point.