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Is this book ' The Little Book That Beats the Market ' - Joel Greenblatt, worth reading ? |
Is this book ' The Little Book That Beats the Market ' - Joel Greenblatt, worth reading ? Exerpt from my free book, downloadably on my website. Click on my profile and read my info to get the site: "The reason that fundamental analysis, technical analysis, or any stock-picking procedure usually does not produce superior long-term results is because the analysts have to be correct such a high percentage of the time in order to overcome the extra costs of research and frequent trading. In her book All About Stocks, Esme Faerber quotes a study from T. Rowe Price that shows investors would have to be correct 70% of the time with their stock selections in order to beat the market's average return. Even a 50% correct track record produced inferior results due to transaction costs. The longer a fundamentalist invests, the more money he has riding on his picks, but the more chance he has to screw up. It only takes a few wrong choices to negate most of the positive benefits previously obtained. And even if you are willing to perform fundamental analysis, you have paid the "expense" of your free time 鈥?time that could have been better spent with family, friends, or Xbox. There are no special prizes or additional virgins in the after-life reserved for the elite few that beat the S&P 500 index." - page 117 It is impossible to beat the market over the long run. So, a book that purports iteself to be able to beat the market is probably a waste of your money. A much better book, IMO, is John Bogle's book, "The Little Book on Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market's Return". I highly recommend that book. It's not a bad book and it's a quick read. I wouldn't recommend it as THE definitive book on investing, for there are a lot of other books out there that are much better, but somewhat more technical and boring. In the spirit of disclosure, I do tend to lean more towards the "fundamental" investor camp, so any book that helps investors "invest" in companies vs. "trade" stocks, I tend to support. Good luck. |
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