Last week, I watched an online interview by Steve Forbes to Joel Greenblatt, a value investor, author of the book: “The Little Book That Beats the Market”.
I read this book about two or three years ago and I remember it as a very enjoyable read (just about 150-200 pages). He proposes a formula to automate the stock picking process that would result from applying value investing principles by a person that doesn’t want to get too much involved.
During much of the interview he discusses how they have tested the formula, how it beat the market in this and that time, etc…
Summarizing, he admits that he based the formula in:
- From Benjamin Graham: buying cheap.
- From Warren Buffet: not only buying cheap, but buying a good company.
- Last but not least: you need long periods of time, thus, patience.
This last requirement is what most speculators (vs. investors) lack of.
If you are interested in the formula, you may use it for free in his website.
Nevertheless, if I were you I wouldn’t stop there, but read “The Intelligent Investor” (especially chapters 8, 14 & 20)… the sooner, the better.
To my friends: if you are interested in Greenblatt’s book, I also got it, if you want to borrow it…