The Little Book That Still Beats the Market
- Author: Joel Greenblatt
- Publication date: 2010-09-07
- Link: amazon
From the summary video by The Swedish Investor. Length: 14min.
- Define your investing universe (list of companies that you have interest in). For example 10 companies in VN30
- Rank them by 2 conditions
low PE(1 for lowest PE, 10 for highest) and
high ROA(1 for highest ROA, 10 for lowest)
- Sort their scores by ASC order since you want the total score as low as possible
- then invest in the top 5 companies of this sorted list.
The pros of this investing framework:
- Simple, easy to replicate, proven back test with historical price data
- this approach "comparison by multiples" is only suitable for the comparable companies. For example, companies in the same sector
- all criteria are treated equally.