Audio available in app
Use a simple formula to pick stocks from "summary" of The Little Book That Beats the Market by Joel Greenblatt
The idea behind the simple formula for picking stocks is to find good companies that are priced at bargain levels. The formula consists of two factors: return on capital and earnings yield. Return on capital is a measure of how well a company is using its capital to generate profits. Earnings yield, on the other hand, is a measure of how cheap a company's stock is relative to its earnings. By combining these two factors, a list of good companies at bargain prices can be generated. The formula works by ranking companies based on their return on capital and earnings yield, and then investing in the top-ranked companies. This approach is based on the principles of value investing, which involves buying good companies at bargain prices. By focusing on these two factors, the formula is able to identify companies that are both high quality and attractively priced. The simplicity of the formula is one of its key strengths. By focusing on just two factors, investors can quickly and easily identify potential investment opportunities. This simplicity also helps to avoid the pitfalls of overcomplicating the investment process. By sticking to the basics, investors can stay focused on what real...
Similar Posts
Screening for trading opportunities improves success rates
To increase the likelihood of success in trading, one must actively seek out potential opportunities. This can be achieved thro...
The power of dividends lies in their ability to generate wealth over time
Dividends are more than just cash payments made by companies to shareholders. They possess a unique ability to help investors g...
Focus on the longterm intrinsic value of your investments
When it comes to investing, it is essential to focus on the long-term intrinsic value of your investments. This means looking b...
Stay informed about macroeconomic factors that could impact investments
It is essential for investors to constantly monitor macroeconomic factors that could potentially affect their investments. Thes...
Technical analysis can guide investment decisions
When it comes to making investment decisions, many investors turn to technical analysis as a guiding tool. Technical analysis i...
High dividend yields can signal undervalued stocks
One of the key concepts to keep in mind when it comes to investing in stocks is the relationship between dividend yields and st...
Consider passive investing strategies
Passive investing strategies involve investing in a diversified portfolio of assets and holding onto them for the long term. Th...
Stay vigilant and proactive in managing your investment portfolio
To succeed in the stock market, it is crucial to always stay alert and take an active role in overseeing your investment portfo...
Develop a longterm investment strategy for sustainable growth
When it comes to investing in the stock market, having a long-term strategy is crucial for achieving sustainable growth. This m...
Pay attention to valuation metrics
Valuation metrics are crucial when it comes to investing in stocks. These metrics help investors determine whether a stock is o...
