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Recommended

The Little Book That Still Beats the Market

by Joel Greenblatt

A hedge fund manager explains value investing simply, with a 'magic formula' for buying good companies at bargain prices.

  • Published 2010
  • Moderate
  • Practical guidance
  • 1 min analysis
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Introduction

Joel Greenblatt, an investor and adjunct professor at Columbia Business School, first published The Little Book That Beats the Market in 2005. The updated 2010 edition is The Little Book That Still Beats the Market.

Written in a simple style, partly to explain investing to his children, it presents a 'magic formula' that ranks companies by quality and price.

Who should read this book?

Investors curious about value investing and picking individual stocks.

Helps with: Get my money right, Think and decide more clearly

The central message

Buying good businesses at bargain prices can work over time, but only if you're patient enough to stick with it through periods of underperformance.

Key ideas and concepts

  1. Buy good businesses cheaply

    Look for high returns on capital and low prices relative to earnings.

  2. The magic formula

    Rank companies on these two factors and buy the top ones.

  3. Mr. Market

    Markets swing between optimism and pessimism, creating opportunities.

  4. Patience

    Strategies can underperform for years before working.

  5. Why most people won't

    The discipline required is why the approach can persist.

Deeper analysis

The Little Book That Still Beats the Market is a clear, charming introduction to value investing principles, and its explanation of why patience matters is valuable.

The formula's past results don't guarantee future returns, and some studies suggest its edge has varied over time. Picking individual stocks carries more risk than index funds. It's best read to understand investing logic, not as a promise.

Practical applications

  • Learn what return on capital means.
  • Compare a company's price to its earnings.
  • Write down why you would buy a stock.
  • Decide how long you'd hold through poor results.
  • Consider whether index funds suit you better.

Your 7-day action plan

  1. Day 1

    Learn value investing basics.

  2. Day 2

    Understand return on capital.

  3. Day 3

    Understand earnings yield.

  4. Day 4

    Read about Mr. Market.

  5. Day 5

    Reflect on your patience.

  6. Day 6

    Compare with index investing.

  7. Day 7

    Decide your approach.

Outcomes to expect

What readers who apply this book can realistically take away from it:

  • Understanding of value investing
  • Patience in investing
  • Clearer stock analysis
  • Realistic expectations

Strengths and limitations

Strengths

  • Very clear and simple
  • Explains why patience matters
  • Charming style
  • Teaches business thinking

Limitations

  • Past results not guaranteed
  • Individual stocks are riskier
  • Formula's edge debated

Reflection questions

  1. Could you hold a losing strategy for years?
  2. What makes a business good?
  3. When does Mr. Market overreact?
  4. Is stock picking right for you?

About the author

Joel Greenblatt

Investor and author of The Little Book That Still Beats the Market.

Full profile and books

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As an Amazon Associate I earn from qualifying purchases.

Book details (title, author, year) are factual. Everything under the headings above is MindsetProdigy's own editorial analysis and interpretation, written to help you decide whether to read the book and how to apply it. It is not a substitute for reading the book itself. Last updated October 1, 2026.