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The Little Book That Still Beats the Market

By Joel Greenblatt
  • Read in 12 minutes
  • Audio & text available
  • Contains 7 key ideas
The Little Book That Still Beats the Market by Joel Greenblatt
Synopsis

Want to invest your hard-earned cash in something that’ll pay real dividends? Not sure how to negotiate the mumbo-jumbo of the financial world? The Little Book That Still Beats the Market is a New York Times bestseller that introduces and explains a simple formula that enables anyone to make above-average returns on the stock market.

Key idea 1 of 7

It is extremely difficult to find a good financial professional who can guarantee you large returns on your money.

Your childhood belief that money magically appears under your pillow evaporated when you discovered the tooth fairy didn’t really exist. But as you grew older, this idea of magically increasing your wealth suddenly didn’t seem so crazy when you learned about investing in the stock market.

Most of us have a rudimentary understanding of the stock market, yet because hardly any of us know how it works, we employ financial experts for help. Unfortunately, the majority of financial experts are not worth their fees.

One expert we expect to make us high profits is the stockbroker. Many of us use their services, but stockbrokers aren’t the best people to trust with our investments. Stockbrokers get paid by selling you investment products, regardless of how profitable they are. They have no incentive to sell you the best products available; they simply need to sell you any products they can.

People also rely on a mutual fund to manage their investments.

Mutual funds, in which investments from many people are pooled, usually come with a high management fee. So although they often yield decent returns, by the time you’ve subtracted the fees, you’re often left with below-average returns.

There is, however, one type of financial investor who can manage your investments well.

An index fund such as Standard & Poor’s 500 Index (S&P 500) is a mutual fund which aims to match the market’s best performing companies, as opposed to trying to beat them. You may think that this would give you underwhelming results, yet, as index fund fees are lower, and because on average the market performs well anyway, index funds often provide you with very healthy profits.

So if you’re happy with someone else managing your money, opt for index funds.

But there is an even better way! If you want to maximize your profit, there is no substitute for learning to do it yourself, and the following blinks will show you how.

Key ideas in this title

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