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 I suggest to read some basic stuff before you buy this book Nov 05, 2009
First of all, I purchased this book, and did it as it suggested, but failed!!!
then I tried to learn some other basic book, such as "Stock Trend analysis", you will find this book did NOT teach you anything, and just ask you to believe some "Magic" in the world, if everyone has this book and follow what the author suggested, then everyone will make money from stock market, it is simply not true!!!
 How to invest intelligently in the Stock Market Oct 21, 2009
1. The best equation is buying good companies with high rates of return on the capital and high earnings yields.
2. Margin of safety assumes the investor can not know the future; therefore, the best opportunity is to buy the stock of a good company, at discount. The optimum discount pricing for buying is near or below liquidation price. Graham identified prices at this level, as, "unreasonable prices". Most, investors shy away from seizing the opportunity at discount prices fearing greater valuation losses due to some undiscovered information, they are not aware.
3. Buying stock is equivalent to owning a percentage of the company. Knowing the value of the company and having confidence the future value of the company will appreciate validates the buying price of the stock. Otherwise, he will invest his money into bonds and gain a fixed interest income.
4. Investors have a hard time at making predictions. For some time after the great depression stock investment was considered risky.
5. Suppose, you own a company and that company is making a profit. The business valuations are known and you decide to sale part of the company as stock. The stock price can be easily computed. The stock price is equal to the business valuation divided by the number of stock. The stock price, at this point is deterministic. The company continues to operate and report profits. The profits are reflected on the income statement. However, the price of the stock fluctuates randomly away from the price too earnings, it initially started. The price swings vary, at times people are paying out outrageous price; and at other times missing bargain prices. But should you care that the price is fluctuation wildly? No. You don't care, about the causes, for the price fluctuation, only that price fluctuated!
6. You want to know the valuation of the business and using this valuation will predict the stock's value and support price to buy and sale. Buying high earning stock at bargain price allows you to earn income from dividend payments with relative without price dropping out.
7. The equation equals buying stocks with high earnings and high return on capital; these stocks come from good companies and are bargain priced.
8. How do we choose good companies at bargain prices? Find 30 stocks with the equation criteria for your portfolio. In one case study, the stocks performed 30% returns for 17 years. Choose companies through a ranking system. Companies with high rates of return on the capital and high earnings yields are ranked highest. Companies with good brand name can perform against competitors, who want a portion of the profits. Companies with a high return on capital are likely to achieve an advantage of kind. Eliminate companies that earn ordinary or poor returns on capital. Readjust your portfolio every three years according to rank. The equation works better than market averages and did not lose money. Don't buy and sell short term because the chances are high that you will lose, instead, invest long-term. Do be afraid of losing clients during short term drops in the valuation of the portfolio, instead, have confidence the equation will work long term.
9. If we know how a group of stock high earnings and high capital returns perform on the average, we gain greater confidence of how they will perform in the future. However, short term price fluctuation will not reveal any future pattern. You will have to be patient. The equation is a long-term performer and eventually outperforms the competition significantly. The equation will work in the long-term.
10. Look for companies you believe will be able to continue in business for many years and companies that should be able to grow their earnings over time.
 The "magic formula" may be worth the price. Aug 29, 2009
Unless you are a novice investor, what you're paying for is the "magic formula" given in the middle of the book. The rest is a simplied version of how the market works.
1 of 2 found the following review helpful:
Excellent Aug 12, 2009
I am a great fan of Joel Greenblatt. This book is very simple to understand and for some more advanced investors, it may be too simple. But, I personally like simplicity because I think that people tend to complicate things too much. In investing, no one really needs to run complicated forecasts and models to see whether a stock is trading at a good price. If you need complicated calculations to convince yourself that something is a good deal, then it probably is not. If most of the mutual fund managers followed Mr. Greenblatt's value investing philosophy, they would do much better than average. Mr. Greenblatt did an excellent job simplifying a somewhat complicated subject of investing.
- Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market
Reminds me of that hot girl your seeing but shouldnt date seriously. Jun 11, 2009
I really like the simplicity of the formula. For someone who invests and believes in the value approach this book makes sense. There are some good valuations used for buying undervalued stocks. But queezy isnt even the word I could use about using last years #s for future earnings. That just screems yikes!
Also, I didnt like the fact he has a website that just spits out companies without showing the rankings OR how the company got on the list in the first place! I cross referenced some of his stocks on the list to inputting the companies #'s in his formula (the formula used in the Appendix ... which I really do like IF you know where to find the info on the Balance Sheet and Income Statements) and they werent even close!!
But as for the formula itself I personally believe its worthy enough to at least consider. Unfortunately, its going to take a good 5 years for me to update this review. But as for now I would trust it only as far as how much money you are willing to invest into "speculating" and even then do your own calculations instead of blindly going by the website. BUT if you insist on taking someone elses word instead of doing your own homework I would almost insist that you use S&P's 5 star. It has a proven (emphasis on that word) track record of beating the average.
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