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In The Little Book That Beats the Market—a New York Times bestseller by "Joel Greenblatt"

Updated: Nov 23, 2021

The Little Book That Still Beats the Market (Little Books. Big Profits)
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Quick synopsis: The author here wants to bring your attention to two of the most important element we see while investing. 1) Earnings Yield 2) Profitability

  • The first (i.e value) can be calculated as (Eps/price) but the author uses (EBIT/Enterprise Value*), the basic idea behind the concept of earnings yield is simply to figure out how much a business earns relative to the purchase price of the business

  • *( EV = market value of equity + net interest bearing debt)

  • Second, the author uses ROCE, calculated ( EBIT/Capital Employed), to examine the value the ability of the business to deploy its capital.

  • * Capital Employed =(Net Fixed Asset + Working Capital**)

  • **Working Capital = ( Current Assets- Current Liabilities ), provided in the balance sheet.

Tactics: The author recommends buying a bunch of 20-30 companies with High Roce and High Yield ) among others in the market............ Do read these beautiful concepts laid down in this book.

I hope you will read & find this great work very helpful.

See you next time,

The Humane Opportunist.

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