The Little Blue Book That Beats The Market

High-Level Thoughts

A simple, effective way to invest in stocks is by picking the top 20-30 companies based on earnings yield & return on capital, then holding at least a year.

Summary Notes

Evaluate stocks based on earnings yield and return on capital.

Pick winning companies by combining these two factors and ranking them. The "Magic Formula"

Joel suggests you then invest into the 20-30 top companies on that list, and hold each stock for a year. After a year, sell winners and losers and repeat the process. For those who are less experienced.

Joel uses the "Magic Formula" as a screen for investing.

Be patient, it’s what makes this formula unpopular, but effective. You can lose for years in a row.

A Ben Graham-like approach to investing.