Book Review: The Little Book That Still Beats the Market

The book is written in the first person point of view of the author, Joel Greenblatt. He talks about the various elements and basics of finance in a much different light as compared to how a common, every day finance specialist would normally explain it. He breaks it down into a level wherein even young kids could understand, making it relatable to people of all ages. Having such a complex topic being discussed in the most simple way possible makes it that much more intriguing to read through, especially that it touches on different techniques on how one could better manage and make their own money. He starts off with a simple story and continues on with many more of them. However, what makes it so difficult to put down this book is that these stories serve as simple analogies of what had before seemed like a complex idea in the finance world. Not only do these stories make it more entertaining and easier to understand the basics of finance, but they are also very informative, practical and relatable. In addition to these series of funny and simple tales is the discussion of a heavy but gentle load of information that all build up to the revealing of the magic formula. This formula, as explained by Greenblatt, is one that has been repeatedly proven to beat the market thus, helping a number of people become better investors.

There were many insights I was able to gain from reading this book. These insights were not only tips and lessons on how to perform better in the market, but more importantly, they have also taught me a thing or two about life in general. One of these includes that you neither have to do something big nor be a certain age to start making money of your own or making a difference to the world. Just like the sixth grader, Jason, you can start small and start as early now. This reminded me that great things really do come from small beginnings; therefore, I must start now no matter how simple my first course of action will be. This just goes to show that anyone at all could achieve the kind of success that each and every one of us wish we had for ourselves, for as long as they work hard enough and really set their minds on their goals. Furthermore, this insight defies the excuses we all usually find ourselves using when it comes to getting something done. There is nothing too small and no one too young to achieve big goals, such as, making money or anything for that matter. Consequently, this insight gives me motivation to do what I can right now and to be more resourceful when it comes to achieving my goals of not only making money, but my own personal goals as well. This makes me believe and understand that truly anything is possible and there is nothing that should or could stop me from attaining my goals.

On a more technical note, this book has also further taught me that in investing, it is important to evaluate the stock before making any decisions. One must be well informed on the potential stocks they might choose to get into. Specifically, it is essential to consider the earnings yield that each stock could give before actually choosing to invest in it. This is because a higher earnings yield will give you a higher rate of return, which is what we want to achieve. Therefore, when entering into the finance world and choosing to start investing in stocks, this particular key lesson is one that should be kept in mind. One cannot simply pick stocks at random; rather, they must be wise in choosing them. This is why it is important to evaluate the stocks wherein one must take note of the different details and information of the individual stocks, such as its earnings yield.

Another thing I learned from this book is that it pays to be patient and loyal. As Greenblatt mentions in the second half of the book, the magic formula does not always work as seen in its underperformance for a number of years. However, he further discusses that if you continue to stick to it, it will go more than a long way. This is because the magic formula had been proven to work better in the long run. Despite the difficulty and frustration one might get from a formula that might not always work, this book teaches us that it is important to have the values of patience and loyalty. In having these, we will be able to acquire other values such as hope and determination that will bring us even further in reaching our goals of earning more money, or as mentioned earlier, any personal goal for that matter. This is because it is in sticking to values and giving them importance that we truly become successful.

In this book, I have definitely learned so many things about the world of finance. It has given me a better perspective of financial matters and has given me tips on how to deal with crazy old Mr. Market. However, more than that, this book has made me realize something much bigger than just investing in the right stocks, and that is this: The truth is that we already know someone just like Mr. Market and have been dealing with her ever since. Mrs. Life. Mrs. Life is so much more unpredictable than Mr. Market could ever be. She always has the highest of highs and lowest of lows. We are all a part of Mrs. Life’s rollercoaster; therefore we certainly know just how crazy she can be. However, what we seem to forget sometimes is that she carries with her something much more valuable than the money that Mr. Market gives us. Mrs. Life brings with her the richness of time. It was through this book that I have learned that time is still and will always be the most valuable currency. No matter how much any of us earns in a day, month or year, at the end of everything, it is the time that we spend that will always be more important than our money. Greenblatt reminds us that it is important to not lose ourselves in trying to earn money that we end up giving up our precious time meant for our loved ones for something so unworthy. It is true that we cannot control the ups and downs of Mr. Market, and even more so of Mrs. Life’s. The one thing we can control is how we choose to spend our time in the middle of all of it because life is about the moments that take our breath away. But more importantly, it is about spending all our time and effort into making each moment truly golden.