Reddit reviews The Little Book That Still Beats the Market
We found 25 Reddit comments about The Little Book That Still Beats the Market. Here are the top ones, ranked by their Reddit score.
John Wiley Sons
Edit corrected the years to nearly 70 from nearly 60. Did anyone else know it's 2016 and not 2006?
Yeah, the questions been asked before. But here's a summary.
Wish you the best.
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I think that a great first step would be to look outside of r/finance. This subreddit is really not advanced at all.
Yorn just recommended you an arbitrary portfolio and some very, very specific (and illiquid) assets. There's a multitude of things wrong with what he said but the biggest ones are:
He is right that you need to learn a lot to invest successfully. One of the first things you should learn is that you don't take unfounded investment advice.
Now, for my advice (which you should research heavily):
There are a few strategies that retail investors can implement if they would like to pursue active management of their portfolio.
These are:
Value - buying stocks that that are undervalued based on some fundamental factor (like earnings). Value is conducive to longer term holdings. This book, despite its dumb title, is a good primer.
Low volatility - Buying stocks with a low standard deviation of price returns. www.betaarbitrage.com Also conducive to long term holdings.
Momentum - Buying assets that have recently increased in price. Tougher to implement and requires more frequent trading, but can be done at the sector level (and across asset classes) through ETFs.
Also, be wary of the advice that index investing as your best/only option. The S&P500 has returned basically 0% in the last decade with 2 50% drawdowns. Not the type of characteristics I'd like to see in my portfolio.
Also, diversification means buying assets that are negatively correlated in bad times. Not just buying a lot of things.
EDIT: Just read below that you don't know what a mutual fund is. I like this book for an introduction to financial markets.
Don't have any textbooks to enumerate here, but as far as "regular" (or as regular as an esoteric topic like quant investing gets) books go:
Have read them all except Expected Returns, that's next on my list (and comes highly recommended). All of them are worth your time, but QV and WWOWS are by far two "must reads."
EDIT: Ben Graham Was A Quant
Not as good as the others, but still worth your time.
Set up a second checking/savings account and have as much as you can direct deposited into that acct.
Read this book https://www.amazon.com/Little-Book-Still-Beats-Market/dp/0470624159/ref=sr_1_3?keywords=the+little+book+that+still+beats+the+market&qid=1562543518&s=gateway&sr=8-3
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Get roommates to keep your initial housing costs as low as possible. Keep you current car running as long possible. Shoot for 50 to 60% savings of your income now while you're used to not having a lot of cash.
> How can I become FI?
Figure out how much you need per year to live on, then save up roughly 25x that amount. You will then be fiscally independent. You save more money by spending less and earning more. It's going to take awhile, so invest your savings with a view to the long term, not the short term.
> Should I max out 401k?
Does your company have an employee match for 401k contributions? If they do, then you should contribute enough money each month to get the maximum benefit from the match. That match is like an "automatic" return - say they match you dollar for dollar up to 4%, well, then, if you save 4% you "automatically" make an instant 100% return when you match it. If they don't match it, it gets a little more complicated, so let's keep going and return to this later.
> How much should I put toward loans each month?
This depends a lot on the interest rates of the loans. If you have subsidized federal student loans at some crazy low interest rate like 4% or 5%, it's probably in your best interest to make the minimum payment each month so you can save more. Think of the interest rate on your loans as a "guaranteed return" - if you pay off a loan that has a 4% interest rate, you are getting a "guaranteed return" of 4% on the money you use to pay off the loan. In the long run, you can safely expect to make 7% or 8% on your savings, though, so why would you pay off a 4% loan? If the loans have 9% interest rates or more, though, you should laser focus on paying those debts off fast, because a 9% guaranteed return is way better than any investment you could make (EXCEPT for the employer match on your 401k, if there is one - if they're offering a 50% match, that's an automatic 50% return, so you obviously want to get that first, THEN use what's left to pay off the 9% loans). Where the line is depends a lot on your investment acumen. As a N00B, I would say any loans 7% or higher should be paid off before you start investing (with the exception of the 401k match!). You say you have a particularly strong desire to pay off your loans (I can relate!) so maybe draw the line at 6%. But paying off a 4% loan early is just really bad arithmetic - don't do it.
> What percent should I save to each account? Checking?
Your checking account is for predictable expenses on a 1-2 month type timeframe. You should have enough money in your checking account that it's not hitting zero constantly. You'll need to practice a little to figure out how much that is. Get an account with Mint.com to track your spending habits and set budgets. (I am assuming you don't write paper checks - if you do, you need a "buffer" in your checking account, in addition to the 1-2 month's living expenses, so you don't bounce checks. Bouncing checks is very bad for your credit - don't do it. If possible, avoid paper checks. If you are going to need to write them, CapitalOne's 360 checking accounts have helpful tools for dealing with that. Similarly, if you are going to need to withdraw large amounts of cash from your checking account, you need a bank with physical branches, as ATMs will only give you a couple hundred dollars at a time, so CapitalOne may be the way to go).
One note on checking accounts: since you will be travelling frequently, you're going to need to use random ATM's at gas stations etc, which charge convenience fees of $1-$5 per transaction. If you get a checking account through Ally Bank, they cover those fees, so that's probably a great option for you.
> High Interest savings?
OK, so once you have 1-2 months in your checking account, and you are getting the maximum benefit from your employer match on your 401k, and you are making the MINNIMUM payment on your loans, the next step is to establish an "emergency account" in a low fee, high yield, FDIC insured savings account. Once again I think Ally Bank is the way to go, because they offer 1% a year APR savings accounts with no fees, and no minimum. CapitalOne also has very good online savings accounts. The purpose of the emergency account is to put away enough cash to deal with "emergencies" - spending that happens less frequently then every couple of months. This would include fixing your car or your teeth or getting through a few months of unemployment. The rule of thumb is 6 months of income saved in your savings account BEFORE you start investing (with the exception of 401k savings that come with an employer match). That is a tried and tested rule that many millions of people have found reliable, so violate it at your peril. Once your income gets into the 6 figure range, and/or once you have total savings of at least 3-5 times your annual income, perhaps you can relax it to 3 months of income, but that's years from now. At your stage you really want 6 months, because here's the thing: your teeth ARE going to get fucked up, your car IS going to breakdown, and you WILL end up unemployed for a few months. These might seem like "emergencies" but we know right now they are going to happen so it would be dumb to construct a personal finance plan that isn't robust enough to handle them. Otherwise, when the first "emergency" inevitably comes along, your whole plan is going to fall to shit. The emergency plan is like the "cheat meals" people build into successful diets: we know the fuck up is coming, so we forestall disaster by building it into the plan.
> Retirement?
OK so we now have your priorities established: (1) make the minimum payment on your student loans, (2) get the 401k match, if any, (3) get a couple months of cash in a checking account so you're not hitting zero all the time, (4) establish an emergency account ASAP - say, $500 a month until you have 6 months in there, (5) pay off any student loans with an interest rate 6% or higher.
The NEXT step is explicitly starting to save for retirement. It will probably take you a year before this makes sense to do. Over the course of this year, you are getting your fiscal house in order: figuring out how much you need to spend every month to be a happy healthy person, establishing a bulwark against "emergencies," getting that free money 401k match, and starting to dent at your debt burden. Once all that's set, then you can start tackling retirement directly. If you skip those steps, you will take one step forward, then two steps back: you'll hit overdraft your checking account and have to pay a $35 fee, or your car will break down and you'll have to put the repair bill on a credit card with a stupid high interest rate, or you'll default on student loans and ruin your credit. Etc. That shit will totally hamstring you so deal with it first.
A year from now, you start saving per se for retirement. How much? Well, I say . . . fucking, all of it. I want out of this rat race as soon as possible. Keep your "nut" (monthly expenses) as low as you can, do 1-5, and then put the rest in a low fee broker account where you practice a sensible investment policy. I am a big believer in value investing and the Magic Formula, so if you want my advice, read that book, take it in, and learn to invest. You'll also do fine if you just invest in the S&P 500. DON'T TRADE A LOT, you will shoot yourself in the foot with taxes and fees. Interactive Brokers is an exceptionally low fee and versatile online brokerage account I highly recommend, but it is not user friendly, so be forewarned - you need to RTFM with that site.
I hope that's helpful for you. In case your interested, here's my story with this stuff. I am now 29 and have approximately one year of my current income in savings, which is approximately 4 times what I spend in a year (so I consider it 4 years of savings). When I got out of college, at 22 I made about 1/3 of what I do now, and I spent it ALL. I was lucky enough not to have student debt (rich uncle!) and to have the sense to get my full employee match (100%, up to 4%, so I was effectively saving 8% a year) but beyond that I just enjoyed myself. I am a good worker and got big raises each year, so I was making about 50% more three years later . . . But still basically spending it all. I then somehow got a hold of David Ramsey's book, The Total Money Makeover, which I highly recommend (though it's not the gospel - refinements are ok), and decided to get my shit together. I found that I could cut my spending in half without being any less happy or healthy. I live in a city and ride a bicycle everywhere and workout in a city rec center that costs me $150 a year, I have two sturdy suits 5 pairs of pants and 5 shirts for work and a pair of levis and some button downs for life, a netflix subscription, an $25 aerial on my tv for watching live sports, and a library card. I cook most of my own meals which I enjoy and am getting very good at. I give myself $150 a month for alcohol and bars which is plenty for 3-4 big bar tabs with friends and that's all you friggin' should drink anyway. I get a new phone every 3 years and use the minimum plan. Travel is important to me so I spend $3-4k a year on it - pick your battles. Still, by my estimations, if I make the same amount I do now, I'll be ready to retire before 40, but my goal is to be done with offices by 35 through solid investing and continuing to work my ass off and get raises at work. Incidentally, no, they don't all hate me at work, and none of my friends think I'm cheap, because I'm not - I can buy someone a drink without blowing up my budget. But I am personally content to live frugally and work hard and get out of this fucking rat race ASAP.
The little book that still beats the market by Joel Greenblatt
Predicting the Markets of Tomorrow - James P. O'Shaughnessy
Read these books, in this order:
Buffett: The Making of an American Capitalist
https://www.amazon.com/Buffett-American-Capitalist-Roger-Lowenstein/dp/0812979273/
The Little Book That Still Beats the Market
https://www.amazon.com/Little-Book-Still-Beats-Market/dp/0470624159/
Margin of Safety (only available in free PDF now, out of print)
https://files.leopolds.com/books/Margin.of.Safety.1st.Edition.1991.Klarman.pdf
Common Stocks and Uncommon Profits
https://www.amazon.com/Common-Stocks-Uncommon-Profits-Writings/dp/0471445509/
The Intelligent Investor
https://www.amazon.com/Intelligent-Investor-Definitive-Investing-Essentials/dp/0060555661
They'll teach you what's called value investing. As a system it was approximately originated by Benjamin Graham, Warren Buffett's mentor. It's the only system of investing that has been shown to consistently work over an extremely long period of time (nearly a century at this point) and anybody can learn to utilize it.
The first book will give you a close-up walk-through of value investing by following Buffett from his earliest days forward, including how he thought about investing (the most important aspect). That'll prime you to more easily be able to understand and digest the next value investing books. Once you have digested enough about value investing, you'll be able to adapt its ways to the things you're particularly good at (there are various styles or approaches to value investing; the best at it all use slightly different custom techniques in how they find stocks, what kind of levels of value they require before they invest, when they prefer to sell or not, risk tolerance, etc). As a system it's fundamentally built around logic / reason as the primary tools of appraising investments and making decisions, it encourages you to push emotion out of the equation of investing as much as possible (and in doing so, you automatically acquire a dramatic leg up over most investors big and small).
Of critical importance: value investing is not about producing small conservative returns. The best value investors have smashed the market's average returns over extremely long periods of time and they have tended to beat all other types of investors. Value investing is about: 1) not destroying capital, so that you can retain and compound it, taking maximum advantage of the extreme power of compounding returns; 2) picking investments that have an appropriate margin of safety (they've been significantly mispriced by the market), that protects your downside, while exposing you to a very large potential upside.
EDIT: https://www.youtube.com/watch?v=WEDIj9JBTC8 questo è l' abc... 43min, spiegato da uno che ne sa
https://www.youtube.com/watch?v=PHe0bXAIuk0 30min
http://www.amazon.com/Dual-Momentum-Investing-Innovative-Strategy/dp/0071849440 questo è un capolavoro... ma forse è un po' più per intermedi, comunque discute un po' di tutti gli strumenti finanziari, se non ne mastichi avrai un po' di difficoltà all' inizio, forse..
http://www.amazon.com/Little-Book-Still-Beats-Market/dp/0470624159/ref=sr_1_1?s=books&ie=UTF8&qid=1448967495&sr=1-1&keywords=little+book+beats+market
questo forse dovresti leggerlo per primo, è un libro piuttosto controverso, alla fine è fatto per vendere e per vendere una formula al suo interno, ma di base ti insegna il "modo di pensare" corretto quando si parla di investimenti e allocazione del denaro. probabilmente quello che insegna di più in minor tempo, quindi la scelta primaria...
se vuoi qualcosa di avanzato, questo è veramente top: http://www.wallstreetoasis.com/forums/on-the-job-with-simple-as%E2%80%A6-my-research-process
mi raccomando di guardare pure i video, ma è un sacco di roba da guardare...
Building on the idea of value investing check out:
http://www.amazon.com/Little-Still-Market-Books-Profits/dp/0470624159/ref=sr_1_1?ie=UTF8&qid=1334207938&sr=8-1
It explains a lot Ben Graham's ideas in an easy to read intuitive format.
One of the strategies that I hear that still work (and it will still work because it is hard to follow by everyone) is described in https://www.amazon.co.uk/Little-Still-Market-Books-Profits/dp/0470624159
Has anyone had any luck investing as per 'The little book that beats the markets.'?
I find it hard to believe that using his website, which picks the stocks for you, and buying those stocks each year then selling them at the end of the year and then buying new stocks the next year, works.
Has anyone have insight into this?
https://www.amazon.ca/Little-Book-Still-Beats-Market/dp/0470624159
https://www.magicformulainvesting.com/
>How do the decisions on business plans actually affect the stock price?
Business plans provide a road map for the future of the company. Since the future of the company is what you're buying it can impact the company's current share price a lot.
>Are you saying the business plan or redevelopment of that plan actually changes revenue and hopefully profit, and that information is reflected in the 10k, which drives up the stock price?
What I'm saying is that the company's business plan will eventually result in revenues and hopefully profit. If the business plan is bad then you should expect bad profits. If the business plan is good then you should expect good profits (note: knowing a good business plan from a bad business plan can be very tough)
>Who is actually determining the stock price?
People/Institutions (like pension plans) determine the stock price via buying and selling. Supply and demand dictates the price,
Is it driven by more people investing or is it valued by appraisers and then set at that point and people can thereafter invest at that price?
Appraisers don't really exist in the market. You have people who are willing to sell at a certain price and people who are willing to buy at a certain price. Once someone is willing sell at $X AND someone is willing to buy at $X you have the "market price". The seller will give the stock to the buyer in return for $X in cash.
If you have a good article for me to read on the subject I would be happy to digest it.
REad this: https://www.amazon.com/Little-Book-Still-Beats-Market/dp/0470624159/ref=sr_1_1?ie=UTF8&qid=1510610617&sr=8-1&keywords=the+little+book+that+beats+the+market
https://www.amazon.com/Little-Book-Still-Beats-Market/dp/0470624159
Do you have access to free printing by any chance? perhaps you can get an electronic copy and just print it?
I'm guessing that you're young, based on your talk about allowance. I don't recommend Intelligent Investor, as there might be some prerequisites that you are missing. The book is pretty accounting heavy terms, and you should have at least a basic knowledge of corporate accounting before reading it. Save this one for when you can look at all 3 financial statements and know what ever item on those statements mean.
You might this one to be more of an easier read: "The Little Book That Beats The Market". This one tries to get you to think about companies as businesses instead of tickers with a fluctuating price. You won't need any knowledge of corporate accounting for this one.
http://www.amazon.com/gp/offer-listing/0470624159/ref=sr_1_1_olp?ie=UTF8&qid=1394658640&sr=8-1&keywords=the+little+book+that+beats+the+market&condition=used
If you want to learn some corporate accounting, I recommend this one as it an easy read and catered to beginners. Also, it's $4 on Amazon so your allowance can go a long way.
http://www.amazon.com/gp/offer-listing/1416573186/ref=sr_1_2_olp?ie=UTF8&qid=1394658943&sr=8-2&keywords=interpretation+of+financial+statements&condition=used
I don't recommend Random Walk On Wall Street for your level. EMF is basically something that says the average investor cannot do better than the average investor (duh), in the grand scheme.
The Little Book That Still Beats the Market
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In this book the author talks about his magic formula which basically boils down to picking a couple of companies based value (he uses P/E ratio and ROIC to screen stocks) and he hods them for a while and rebalances every quarter or so. Not entirely sure how it works, but I am currently reading the book and it seems interesting.
This is true, but what increases exponentially also decreases exponentially. The thing is that when you are trading capitalized assets, prices can swing wildly because things are traded on multiple basises. I made the mistake, for example, diversifying across businesses that do not exist in 2010-2011. In fact, I am famous/infamous for it in some circles I would suppose. Discount what I say accordingly.
Made a million by making roughly 20x my money across a handful of companies that exist. Lost everything early 2011. Took a year off and got started a different way. Haven't made much progress if you mark everything to market right now but I am still making more in stocks than my job, as has always been the depressing case. Meanwhile, I'm interested in some sort of income stream that pays me more along the lines of what I am worth as I have a history of making/saving millions everywhere I go.
I have a book recommendation:
http://www.amazon.com/100-stock-market-distinguished-opportunities/dp/0070497729
Anyway, with what you are doing, you can fairly easily secure your future income stream and open your life up for a lot of alternatives. I work with a few people that are in your neck of the woods, making millions but not really having the capacity to turn those millions around into income producing assets.
Losing everything has given me a perspective that I will never lose. An asset is only an asset to the extent that it pays you to take responsibility for it. I prefer assets that I do not have to monitor and I can let go.
If you want to do a hands off lazy way that will likely annualize 20%+ returns per year I recommend the mutual fund FNSAX. There's a book on that too. The guy that created it is Joel Greenblatt and he annualized 40% for 20 years. I can provide you this one as a pdf but here is the amazon link:
http://www.amazon.com/Little-Still-Market-Books-Profits/dp/0470624159/ref=sr_1_1?s=books&ie=UTF8&qid=1381436121&sr=1-1&keywords=the+little+book+that+beats+the+market
Congratulations on your success. It's not every day that you get to run into someone who has lived out your worst fear, losing everything (that's me!). Haha, well. I'd be glad to take a look at what you are doing and let you know if I think your weaknesses are, but the parting wisdom that I want to leave you with is to really assess the extent of that which you do not know. If you don't know investments, diversification is your protection. Use it. Diversify as much as possible across asset classes.
Again, I don't know anything about you. But this is me: http://bit.ly/1WggNE
http://www.amazon.com/Little-Still-Market-Books-Profits/dp/0470624159
This book wont put you to sleep.
Assuming you're newer to the topic--or else why else would you be asking for books to understand it--I would start with one of "The Little Book of..."
I recommend for value investing types: https://www.amazon.com/dp/0470624159/ref=cm_sw_r_cp_apa_ZmsUBbTG4X8NJ
And index investing types: https://www.amazon.com/dp/1119404509/ref=cm_sw_r_cp_apa_1psUBbBD9SS81
This book talks about perfectly legal ways: http://www.amazon.com/Little-Book-Still-Beats-Market/dp/0470624159/ref=sr_1_1?ie=UTF8&qid=1456851552&sr=8-1&keywords=the+little+book+that+beats+the+market
There are many studies out that as long as you weigh your portfolio by anything other than market capitalization you can beat the index. But it is only over very long time horizons and quite boring.
You could also randomize your stock selection. Random beats most active managers.
These might help you:
Might as well be a children’s book
ROC is important, but so is earnings yield. You may get a kick out of this book, it goes in to this in depth.
https://www.amazon.com/Little-Book-Still-Beats-Market/dp/0470624159