Preview

The little book that still beats the market

Better Essays
Open Document
Open Document
1020 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
The little book that still beats the market
The Little Book that Still Beats the Market The Little Book that Still beats the Market is a short piece of writing that presents clear and simple explanations of the basics of investing and how the stock market works. Through his years of experience and expertise, Joel Greenblatt has constructed a “magic formula” that promises to deliver above-average returns on your investment in the long run. In this paper, I will discuss several topics that include: a summary of the book, what I found most exciting about the book, the magic formula and several stocks that I picked out using the magic formula investing website. To open up the book, Greenblatt illustrates a situation in which a boy at school sells bubble gum to his peers at school. This situation then evolves to a point in which the Greenblatt and the young school boy are trying to determine the value of his business. We soon learn that determining the value of any business is the first step in efficiently investing. Greenblatt briefly covers the different ways in which one can store their money. Several options included: a mattress, the bank, the government or individual firms. The idea of putting your money under your mattress is by far, the worst option possible. This is because the money under your mattress does not collect any interest, nor does it elude the cost of inflation. A more efficient way to invest your money is to do it through the government, bank or corporation.
All of these choices are superior for a few reasons. If you chose to put your money into the bank, the Federal Deposit Insurance Corporation (FDIC) will insure your account for up to $250,000. This is a pretty safe investment considering the guarantee of the FDIC and the solid interest rate provided by the bank. However, the safest investment is to put money into the government. This is because are permitted to print money and collect taxes and therefore considered risk free. If you are feeling a bit more risky or want an

You May Also Find These Documents Helpful

  • Satisfactory Essays

    3. A typical investment when investing cash for a short period of time would be a short term government security.…

    • 448 Words
    • 3 Pages
    Satisfactory Essays
  • Satisfactory Essays

    power word of macbeth

    • 1013 Words
    • 4 Pages

    Interest rates are usually higher than the rates for savings account but lowers Bank Money Accounts have no risk on the first 100,000.…

    • 1013 Words
    • 4 Pages
    Satisfactory Essays
  • Good Essays

    Econ 214- Problem Set 2

    • 539 Words
    • 3 Pages

    Savings cannot always be withdrawn and are more stable than checking accounts, as a result banks need to maintain reserves against their checking accounts (Gwartney, et al. 2013). Yes, money is safe in banks because the Federal Deposit Insurance Corporation (FDIC) was established in 1934 as a result of the 1922 to 1933 bank runs. This insurance insures me up to $250,000 per account if the bank fails.…

    • 539 Words
    • 3 Pages
    Good Essays
  • Better Essays

    This case provides us an insight into the Golden Years Investment Club and the conflict of group members when a newcomer challenges the views and ideas of the group’s experienced founder. Lenn Width, the founder of the investment club, has recently invited David Korn, a young architect, to join the twenty-six-member group. Width and Korn have very opposing viewpoints when it comes to how to invest. Width has a very strict investment policy: “a stock must have been publicly traded for at least five years; its sales must be growing by 15 percent a year; and it’s got to have a return on equity of 10 percent or better” (Fight at the Investment Club, 1994). On the other hand, Korn is interested in a more aggressive style, investing in riskier stocks with larger returns.…

    • 1237 Words
    • 5 Pages
    Better Essays
  • Good Essays

    In the first part of “The Number” Berenson chronologically covers the history of the stock market from the Crash of 1929, the reform efforts of the 1930’s, the later regulatory efforts to establish standards for accountants and increase financial disclosure, to the 1970’s when the end of fixed commissions for brokers also meant the end of investment research, which was the source of knowledge for investors about the companies in which they were investing.…

    • 1110 Words
    • 5 Pages
    Good Essays
  • Satisfactory Essays

    Problem set 4

    • 380 Words
    • 2 Pages

    Because unlike checking accounts, savings accounts are not as easily accessable. The money typicaly stays in the savings account. Yes, the money in the account is insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC)…

    • 380 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    The author states the dangers of investing aggressively when a person is young. The rationale behind this is because some that is young is able to risk a loss more so than an older individual. The author indicates this is often misleading and younger individuals should save their money, invest conservatively, and watch the returns increase over time. By using this method a person can actually see more of a return than some who gets a return right away but may lose it all after one hasty bad investment.…

    • 444 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Juliet’s mind shifts from restless, to sorrow, to utterly distraught through the variety of scenes in Act 3.…

    • 339 Words
    • 2 Pages
    Good Essays
  • Good Essays

    Many believe that the Federal Reserve System is gaining an excessive amount of power, which can be insidious for the individuals who inhabit in America. The people of America fear the abuse of the power the Federal Reserve System holds. However, if the power of the Federal Reserve System were never expanded, United States would have been in a crisis economically and financially. Due to the Federal Reserve System’s power, the interest rates have been positively impacting the American lives. This is verified by the Time, “The money you have stashed in savings and money markets accounts will earn higher interest.” This demonstrates that the interest rates are not only helping the government, but as well as the people too. Living in the United States requires an essence to obtain savings and due to the work the Federal Reserve System does, the people are receiving interests, or in other terms “free-money”. Therefore, keeping this system would serve as the best alternative for both the government and the people who inhabit in the United States of…

    • 827 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Strengths Based Leadership

    • 3262 Words
    • 11 Pages

    funds, stocks and companies. Most of us know better than to sink all our money into a…

    • 3262 Words
    • 11 Pages
    Powerful Essays
  • Good Essays

    Trust in our government has been declining in recent years. Given the current status of our economy it is less likely to think of the government as an option for building retirement. However, investing in government bonds and securities can offer protection from times of high inflation which will leave a reliable source of income during retirement. I bonds and treasury inflation protection securities are two of the easiest ways for college graduates to begin building a retirement fund. For recent college graduates government investing can be one of the easiest and safest ways to begin saving money for retirement.…

    • 1033 Words
    • 5 Pages
    Good Essays
  • Powerful Essays

    Metrobank Services

    • 1898 Words
    • 9 Pages

    Save your dollars in a Metrodollar Savings Account and get the benefit of earning interest in dollars too!…

    • 1898 Words
    • 9 Pages
    Powerful Essays
  • Better Essays

    HOW A MATH WIZ BORN IN THE 12TH CENTURY IN ITALY, EDU-CATED IN NORTH AFRICA, SON OF A DIPLOMAT HELPED MY FINAN-CIAL LIFE.…

    • 1540 Words
    • 7 Pages
    Better Essays
  • Good Essays

    One should have a saving bank account or should open a new saving bank account…

    • 996 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Media Planning

    • 6915 Words
    • 28 Pages

    3) deploying all your funds in a single medium is usually the most efficient way of spending your funds…

    • 6915 Words
    • 28 Pages
    Powerful Essays