THE LITTLE BOOK THAT BEATS THE MARKET (BY JOEL GREENBLATT)

[@TheSwedishInvestor]

Learn how to pick your first stocks: bit.ly/37xT2JR

[@Kelberi]

What about market melt down as in 2008? Is that why not to bet all at one go? Granted the chance of a meltdown is very minimal. Usually it only happens if I go all in.

[@borntodoit8744]

@@Kelberi *As an active or even passive investor you complete investing process* *invest in portfolio > monitor portfolio > rebalance portfolio > repeat* 1. You invest in a portfolio of assets *creating portfolio* using a mix of assets (see *Asset Allocation Model* to balance risk of major downturn vs reward) 2. You then *monitor portfolio* (every 3 or 6 months)... 3. You then periodically *rebalance portfolio* to keep portfolio on target AAM as assets individually growth taking overall AAM out of target balance *Your portfolio should be a mix of assets* (cyclic assets, defensive assets, secure assets, safe assets). The emphasis on knowing what the difference is , I remember it as ; *cyclic assets* are most risky (most volatile=most reward) typically correlated with economic strength (eg stocks), *defensive assets* are lesser risk (lesser volatile) so uncorrelated to economic strength (eg bonds) *Secure assets* are even less risk (less volatility=more security) uncorrelated to economy with minimum objective match inflation (eg cash plus interest paid) *Safe assets* are least risky (least risk=most secure) inversely correlated to economic strength (eg gold). There are literally thousands of assets more than stocks, bonds, cash equivalents and precious metal to choose from. If you don't invest directly in individual assets learn to invest in funds that invest in a basket of individual assets to balance risk vs lack of ownership overhead. Google ETFs (exchange traded funds). *With weak economy* Investors move money from more risky Investments (cyclic, defensive and secure) to least risky Investments (secure, safe). Gold is a "safe haven" asset when economy is weakest. *With stronger economy* Investors move money from least risky to more risky Investments (to make money off volatility). *AAM* is a % mix for your choosen overall risk-reward approach to apply to financial portfolio. *Standard models* are documented (Google them - conservative AAM, balanced AAM, growth AAM or even aggressive growth AAM) *Non-standard models* are possible (nothing to stop you creating your own exact mix or model)...but if you do and don't understand the implications of your choice you could be over exposing yourself to unnecessary risk. *Best advice given impending economy crash in 2020* followed by recession and recovery over next 5years is Ignore cyclic defensive assets Put money into safe assets now (to ride out immediate crash) then move to secure assets (during recession) and then move to cyclic and defensive assets (during economic recovery). *THAT'S IT IN A NUTSHELL !!*

[@pd1jdw630]

So, what are your take away’s from : Trading Psychology 2.0 ?

[@MrSlavatop]

Привет

[@mohit4399]

If you are so good at investing, then why run a channel. You probably would have enormous money.

[@rickwalgaard3255]

your channel is so under-rated, all the other investor pages just push their sponsored brokerage sites and try get you to trade A TON instead of the ideas and concepts you talk about. Great channel. Keep it up

[@Backtrap1943]

wait till he goes big and hits the 1M. 😄

[@Nikhil-qd2qg]

Hi, can you please tell me some more good investors pages like this? I want to learn more

[@maxb5640]

There is one amazing book about trading: Reminiscences of a Stock Operator. What is great about this book is that it describes trading in early 1900s. A time before charts, computers and books about fundamental/technical analysis. And yet almost everything applies today. The truths which stays the same in drastically different times are one of most important truths. would love to see summary of it on your channel

[@BBFletcher4202]

Thank you sir

[@Friedrich713]

I rarely comment. While Erik's summary on Joel Greenblatt's book is spot on, the bigger context is not addressed, but in fact of utmost importance: The proposed strategy has performed significantly below average market return after it was first released. Since then an updated version of the book has been published: "The Little Book that Still Beats the Market."

[@sureshjogia876]

Who is the author and what changes are made to the formula?

[@aaront936]

@@sureshjogia876 it's the same

[@juanfernandez3633]

One of my favorite books of all time. Joel Greenblatt is an epic investor and I love reading all his stuff.

[@danguee1]

The problem is that Greenblatt's method was good for a time: between 1988 and 2004, it was fantastic and returned cagr 23%. But between 2005 and 2020 it was shockingly poor and returned cagr 6% (while the S&P returned double figures).

[@c2225]

Yes his ETFs are very very bad

[@rupeshchavan6372]

Sir bigg fan from India... I searched all internet for knowledge regarding market but i found only 2 to 3 Genuine channels and you belong to one of them.. Thanks for sharing your knowledge and time...🙏🙏🙏

[@TheSwedishInvestor]

Awesome Rupesh Chavan, I'm very thankful for this comment! Cheers 🙌

[@ralllao7295]

Could you list the other ones? It would be a big help for me 😁🙏🙏

[@FIammen]

How can you tell that this youtuber is more genuine than others regarding stocks? Beside that you enjoyed the video.

[@sunnyhing91]

The major flaw of "magic formula" is frequently trade stock at certain period of time. Keep chasing low PE ratio is like keep giving up growth stock. In long run, "magic formula" may lose a lot of money in trading fees and tax. The one of the practical advantage on Warren Buffet prefer "buy and hold" is to cut tax

[@TheSwedishInvestor]

Taxes and fees should definitely be taken into consideration for any investment strategy and it is true that this one isn't optimal from that perspective. Thank you for you comment sunnyhing91!

[@NuggetHe17]

The most chill and useful channel I've come across.

[@channaholidays7198]

Thank you mr, swedish investor.from SRI LANKA.

[@VinayYadav-jh5zu]

Hey Swedish investor, I LOVE YOUR CONTENT..... you have given me knowledge which was missing from my entire schooling

[@TWN321]

Read the book, then saw your video. Thank you for posting. Question I have is: #1- why would you sell *ALL* of your stocks each year - particularly the positions that are doing well? #2 the formula is just a ranking system. If you begin with the top 20-30 stocks from the list, Rotation out of those stocks forces you to replace them with lower ranked stock, yes? What is the value? Why wouldn’t this negatively impact your returns?

[@TheSwedishInvestor]

I appreciate it TWN321! 1. You constantly want to own the ones that have the highest RoA and the lowest P/E because those companies are likely to be the best undervalued stocks you can find out there according to the formula. So that's the reasons why you shift - because valuation fluctuate a lot. 2. You do not rotate out of a stock that is still in the top 20-30, that one you keep for next year too :) Hope this helps!

[@TWN321]

The Swedish Investor that makes sense. Thx

[@TWN321]

The Swedish Investor .. the book says to replace all positions. It’s makes more sense to rotate out of positions no longer in the top 20-30...

[@Hilee_9]

God bless you Swedish Investor; would have been nice to have known your name. But your videos are so crisp, articulate and just pure value from the get go. I wish you all the happiness and success, and expressing sincere gratitude for your body of work. Just amazing

[@TheSwedishInvestor]

Wow, thank you! 10/10 support, you should know that people like you helps me keep going with this!

[@remussirca234]

You have a great and unique way to get the most juice out of these books, congratulations! I have one suggestion for you “It’s Not About the Money” by BRENT KESSEL

[@PMAtreides]

Rewatching this as I start my Venture Capital journey. I genuinely appreciated that most of your tips aren't work related, but rather life tips in the midst of it. I agree with you, that security and financial stability is important, but personal dreams and ambitions do matter greatly in the long run. Hopefully my heart is in this industry as much as I think it actually is HAHHAHA

[@itisimpossibleto]

Does anyone know how to see the historical companies chosen by the magic formula? (Not the just the most recent quarter on the website). It would be very helpful for my research.

[@citycen01]

Good tip. From What I’ve seen the magic firmly has good potential, but as someone just starting, it makes sense to use it to screen and research. Thank you.

[@no1no1655]

have listened to or read this book at least 3 times. GREAT Summary! Subscribed ! Thanks!

[@KingWillSkill]

Awesome James! What were your results?

[@Hshjshshjsj72727]

yeah did you just read it or actually make money Haha

[@engrahmed7122]

I was looking for these types of videos for a long time. Don't know how to thank you. Keep up the good work.

[@TheSwedishInvestor]

More comments like these would definitely be sufficient as a tank you ... 😏 Cheers Engr Ahmed!

[@dwanew781]

I’m mad that amazon was the actual company I was thinking of 😯😂

[@babyprince84uk]

I think Amazon is an amazing company

[@JayeshJadhav-c7m]

Me too

[@infinityprodinc]

this channel is tooooooooooooooooooooooo good. Thank you sir!

[@michaelmace7952]

Thank you/well-done/will pass on your site to my two sons both in their 20’s..and test them..👌

[@aHunnedBandz]

The perfect ad placement. Never seen it done!

[@HaIsKuL]

Questions: 1. How are the P/E and RoA Scores created? I see P/E is proportional to the P/E score and RoA is inversely proportional to the RoA score, so the lowest total score should be chosen, but I don't see exactly how the formula comes up with the scores. 2. Should you add modifiers to the scores to prioritize P/E over RoA or vice versa or other things like rate of increase, variance, standard error, etc. ? Or do you play with these values at your peril? 3. If a stock is still one of the top picks, should you sell or hold for another year? Thanks!

[@TheSwedishInvestor]

Good questions TheKhal, I will try to answer them here: 1. You simply rank the companies, and one rank step equals to one point. So rank them according to P/E (lowest first) and give the most points to the #1 ranked, 1 less points to the #2 ranked, and so one. Similar for RoA, and then add the points together. 2. There are plenty of other ratios that can be added to The Magic Formula (but this is not what Joel Greenblatt recommends). For instance, you could add the amount of insider buying that the stock has been seeing during the last 12 months. Or perhaps the increase in per share earnings during the last 10 years. 3. You hold on to the stock for another year if it shows up again at hat point.

[@HaIsKuL]

@@TheSwedishInvestor thanks!

[@yogeshmulay3069]

What an awesome channel 😧 Love from India 🚩🇮🇳

[@huntsail3727]

Interesting, clear presentation, good job

[@windstrings_music]

Thank you very much! The book said return on capital.. guess there's a little difference between return on capital and ROA

[@yunuse.1106]

This is the greatest investing channel i have ever seen. I have subscribed and started to watch all the videos! I would like to meet you one day great man!

[@ClayLud]

Great video. Thanks. However what about book value per share?? this keeps you from losing your investment if the business goes bankrupt. Thanks again for these amazing videos!

[@G-007]

Very informative video! Never stop learning!

[@methos1999]

I'm a big believer that investing and choosing what to invest in is an art, not a science - that being said great art is made when the person is has many great tools in their kit. This strikes me as a great tool in the screening process or re-evaluating my existing portfolio.

[@adielwilson8749]

Wow this is gold im definitely going to try this

[@qi1loveizqi799]

One of the best strategic plans I have seen for stocks on here thanks!!!

[@StickJockeyFPV]

Not really.. he didn't mention that it doesn't work very well anymore. www.magicformulaexperience.com/portfolio-update-7-1-2019/

[@Rhino11111111]

The best strategy is to just buy etfs every time you get paid.

[@lisalph8922]

I already did this analysis based on Warren Buffet's formula of P/E ratio x Book Value. You're supposed to buy those stocks that are under 15 but there are only a handful of small caps that meet this because PE ratios are insane now.

[@Ольга-ж5к4й]

And everyone say we have a bubble, that make sense.

[@ElPenetrator21]

Why not use ROE or better yet ROIC instead of ROA? It would give a much better measure of efficiency than a company that has a high return on assets but is very indebted.

[@andreciola7555]

I got little confused in the book, because as you have shown we shoud follow the steps he mentions using PE and ROA, but at the end he says he calculates the MF differently by using --> EBIT/(Net Working Capital + Net Fixed Assets) and EBIT/Enterprise Value.

[@jordiortega4436]

Thank you! I finally understood P/E! ☀️

[@sarahheydinger881]

Thank you!

[@Lp-ze1tg]

If I am not mistaken this book was published in 2008 and the newer version was published in 2010. Given that a lot has happened in the past two years(2019 to 2020) and the recent technological advancement. May I know why it is still popular?

[@ivanfranco458]

OMG I GUESSED AMAZON AND HE THOUGHT IT

[@joaoprima]

I'm reading at this point one up on Wall Street, and already have read the little book that beats the market, basically second Peter Lynch when you find a then of twenty bagger it only takes one of these stocks to compensate the rest that fails...that's why in my opinion the magic formula results.

[@englishcoach7772]

Thank you for your great straightforward videos that help us develop a better understanding of investments and finance.

[@TheSwedishInvestor]

I'm happy to help, especially while getting comments like these 😁 Cheers englishcoach777

[@sleepless2541]

i have a question, instead of trying to buy stocks once every 3 months couldn't the stocks just be bought once a year on a specific date? would that change the performance for the worse? would it have any impact whatsoever?

[@Winter-Bruin]

Thanks for the info, as a new investor I am always stock piling information. The best info has been coming from your videos, thanks!

[@borntodoit8744]

@Christian A always revisit video periodically too see updated comments. See my note to top pinned comment..should help you as a novice!

[@TheSwedishInvestor]

Awesome Christian A, love to hear it! 😁

[@talentlesscommenter1329]

This sounds like a good strategy, but I will add pb ratio as well to maybe get even higher returns,

[@javierreyna5321]

Explain, please. I'm new

[@talentlesscommenter1329]

Javier Reyna pb (price to book value) ratio is a popular method of value investing. To use this method you divide book value (total assets of a company) by market cap this will give you pb ratio (lowest is better). To add this to the magic formula you must rank the best magic formula companies by lowest book value. Hope this helps! 😀

[@javierreyna5321]

@@talentlesscommenter1329 thank you. BTW any book suggestion that you recommend?

[@perryhunter4751]

@@talentlesscommenter1329 Hi there TC. Could you do an illustration adding the PB with the lowest 📖 value? Much appreciated!

[@TheSumitsscet]

Just a small correction, he suggested to use ROC than ROA , and use Earnings yields than P/E.

[@AryanMalik-kf2li]

Very Informative and Interesting content Thank you Sir

[@sandipbrahmkshatriya1829]

Sir you explaining very well 🙏

[@TheSwedishInvestor]

Glad to hear that you like it!

[@libertaliagroup]

This should be extremely helpful for beginners

[@QuantCompounding]

Great book and video! I’m 2 years into this strategy now and still going strong 🤜

[@nicholasmulyar]

How is it going for ya?

[@soundwave9560]

PE: price/yearly earnings, u want business with lower pe ROA: yearly earnings/cost to set up the business’ physical location, u want a high ROA Goal: use the “magic formula” to get companies with high ROA for low PE

[@federicazenoni1353]

I think the idea behind this channel is super, and videos are really well done Thanks!

[@TheSwedishInvestor]

Glad you enjoy it Federica Zenoni!

[@alaaaboudaher4136]

A great video about the greatest investment book ever... thank u guys

[@SandipanSarkar-c8v]

Finished watching

[@thefasteddie88]

I am loving your content. Thank you.

[@danishsamir8807]

The Swedish investor : it is difficult to pick something that rhymes with magic formula. Eminem : Hold my beer

[@DodInTheSky]

Getting ebola

[@danishsamir8807]

@@DodInTheSky close 😂😂😂😂

[@danishsamir8807]

@@DodInTheSky or you can say 'my tragic Ebola' 😂😂😂😂😂😂😅😅😂😂

[@dirtymike3329]

“Bad bitch scorning ya”

[@danishsamir8807]

@@dirtymike3329 😂😂😂😂😂😂😅😅😂😅😂😂😂😂😂😂😂😂😂😂 LMFAO!!!!

[@lovepakistan3659]

The book uses EBIT/EV vs PE. The book actually discourages using PE. In the recent years I was reading on reddit that it does not outperform anymore

[@NazmulHasan-iv5qw]

Man, you are superb. Thanks for such contents. Wish you all the best.

[@abhijitkhialani]

Great work...your channel is very helpful..thanks..

[@MagicalStocks]

I maybe a year late but thank you for this video. I am currently using magic formula investing in Philippine Stocks Exchange and got a gain of ~26% in one month. Hoping to get the target of 30% before the year ends :)

[@leonjonesuk3521]

I hit that every month, return guaranteed at 1-1.5% a day, tbh i think its unbeatable, 16 months and not a single day have i lost money

[@Alex-ht9gb]

Premium content mate! Coming from big 4 chartered accountant

[@abdullahmuzaffar7486]

Could you make videos on summaries with more then 5 advices from the book to actually juice out everything

[@andreat3266]

Hi Swedish investor, great video ! Question : are you aware if the author or anyone else ever back tested the same method with longer holding periods, that is by holding the same position for 2 or 3 years (instead of 1 year) before selling and replace it? (I guess this implies ignoring any tax consideration). Thanks and ciao, A

[@wanderalmeida9584]

Thanks from Brazil.

[@TheSwedishInvestor]

Cheers! 😁

[@DanielsPengetips]

Great summary as always!

[@esha102691]

Love all of your videos, thanks so much

[@niro56]

Can't say about the "magic formula" but this seems honest advice in the book.. cheers

[@kl3940]

can you make one for options

[@sofanova6542]

Nice... I would choose few stocks using this formula and will compare it against others in my portfolio. Thank you!

[@mjt_00]

Already watched a lot of videos from you thank you so much. PS: was interesting to see which person is behind that voice!! One of the greatest content on youtube

[@raaaavlogs]

The magic formula>> low pe & high roa

[@lw1343]

Very good. Another tool for ones toolbox if they choose.

[@TheSwedishInvestor]

Yes, it's a useful one. And you can make slight modifications to it to fit your own personal style, like including one or two more variables and weighing them slightly lower.

[@user-jc6tj2xt1p]

In another channel, she said the 2 metrics are earnings yield (E/P) and Return on Capital.

[@TheSwedishInvestor]

It is true. Joel Greenblatt uses earnings yield vs P/E and return on capital vs return on assets somewhat interchangeably in the book, but his definition of earnings yield and return on capital is not exactly the same as P/E and return on assets. I bet that if you run filters either 2 of the variables, you'll end up with almost the same results though.

[@user-jc6tj2xt1p]

@@TheSwedishInvestor You're right.

[@evelynbabirye8]

Well developing your own is quite hard but after the video, think my mind hit some thing

[@vibetrading]

This is magic formula you need. Get the stocks from the site, monitor the stocks so you know when to pull the trigger.

[@bernardting3361]

Excellent analysis

[@AI-jg9fl]

Great summary. Thank you.

[@MULTIRAGE456]

Market is the most intelligent entity in a country. Don't try to outsmart it. Just follow its price action and try to ride with it.

[@WayneJohn-fq6cn]

Gotta try it out

[@farazk84]

Hi, nice video, but I’m not sure about the numbers. $10,000 invested for 17 years at 12.3% v 13.8% gives you $72k at 12.3% or $90k at 13.8%…I think you suggested that 13.8% would give you almost a million

[@ΙωάννηςΜέρμηγκας-σ8σ]

For rhyming with "magic formula" i would strongly suggest "tragic Romulan" :P , cheers and keep up the great content !

[@TheSwedishInvestor]

Why didn't I think of that 😅😂

[@wisdomcookies8047]

Nice Channel ...and very useful information!👍

[@ernest1520]

The whole ROA factor is confusing because there are places where it is the ROI (or ROIC to confuse things even more) that's used instead. The book itself mentions using the ROIC for magic formula, yet it suggests using ROA for "manual" magic formula calculations without really explaining why.

[@alexanderkuzmenko7056]

The reason is simple ROIC is much harder to calculate accurately.

[@longdoan733]

Hi, I appreciate your great video but there is one thing I need to clarify. In fact, in the book, the author used "Return On Capital" not "Return On Assets". There is a huge difference between these two factors.

[@sleepless2541]

roa/roc/roe/roic/rotc/roce, etc are all profitability ratios, they all would outperform the market given enough time and an adequate level of diversification, it doesn't matter which one you use, just be disciplined with the approach and you're good

[@matinghorbani8049]

great job brushan

[@myl0rd3]

Amazing! Do you personally use this strategy?

[@TheSwedishInvestor]

Yes, I've been using a variation of this method for screening for stocks. The method has changed over time as I've tried to improve it/adapt it for myself. I think it works well for narrowing down your options if you are an active investor. For instance, you can limit yourself to only looking at the top 100 companies according to the formula, instead of the whole universe of stocks which would be several thousands.

[@elishawhite7487]

@@TheSwedishInvestor I’m curious what returns have you seen percentage wise from your investments if you don’t mind saying

[@edom9140]

Thank you SOOO much. Useful and fun

[@TheSwedishInvestor]

Edo M 🙌

[@jess-mu7kq]

Incredibly interesting information and so far one of your best video 👌👌👌👌👌

[@TheSwedishInvestor]

Very glad to hear i jess! Cheers! 🌟

[@JoyFin]

Magic formula use EV/EBIT instead of PER

[@kamalakannangunalan]

Bro do top 5 for trading price action by al brooks but this book if full of theories and concepts hope you can find a way to shrink them into top 5 take away

[@TheSwedishInvestor]

As always Kamala, thank you for your support and your suggestions 🌟 I will add this to the list. Judging by the likes on your comment, you seem to have quite a few who support your suggestion as well, so that's great 👌

[@kamalakannangunalan]

@@TheSwedishInvestor Thanks for considering Your videos are giving gr8 info

[@kamalakannangunalan]

Al brooks on price action consists of 3 book series trend,range and reversal

[@true_human_007]

WE CAN CONSIDER ROCE INSTEAD OF ROA. ROCE INCLUDES ASSET AND EQUITY TOGETHER WHILE CALCULATING THE RETURN.

[@investingislife2908]

Thank you. Great video!!!

[@TheSwedishInvestor]

🙌

[@Brian4hand]

Nice vid, I liked the conclusion at the end as well. I’ll def check this out as a screening tool for mah swing plays haha

[@nqobilentuli4244]

It's 4 years later. Any updates on where this worked

[@abirmukherjee5578]

U deserve more subs

[@TheSwedishInvestor]

😍

[@Mondrayish]

Pretty sure that the two metrics for the Magic Formula wasn't ROA and PE but rather ROIC/ROC and Earnings Yield.

[@wayneaustin5533]

The market is always right

[@gabrielbastin8282]

Went on the Magic formula website, WE have to registre :)

[@mudassar1]

The book mentioned Earning Yield & *ROCE* not ROA.

[@sachastayswi]

Had an epiphany... Tax-loss harvesting + magic formula + Robinhood 😁

[@naufalnugraha6035]

Where can I buy The Theory of Investment Value BOOK?