The Simple Investing Way To Retire Rich

References: The Little Book That Still Beats The Market; You Can Be a Stock Market Genius

This method is only for long-term investors (five years or more).

Simple investing: If you have a lot of time before you plan to retire, I highly recommend this system.  If you’re in a hurry or you’re looking for a Fast Track to Wealth system, check out my post: Get Rich Quick With Stocks. (hee…hee!)

Or, if you already have a tidy retirement sum and are looking for a top money manager:

• Best Money Manager: Secret to Finding the Top 1%

This simple investing system came from the book The Little Book That Still Beats The Market by Joel Greenblatt, one of the most brilliant investors no one seems to have heard of outside of Wall Street.  I’ve read his books.

The stuff he’s accomplished in investing is basically what most people on or off Wall Street will tell you can’t be done because, frankly, they aren’t smart enough to do it.  (Or those huckster clowns who scream, “Follow my system and you’ll make 562%, 933%, even 12,873% profits on every trade!!!”) Yeah.  I’m so there.

If you’re really detail oriented (super-nerdy like me)…

…love research, and want to get deep in the weeds on investing, read Joel’s other book: You Can Be a Stock Market Genius.

Like, right now! This book explains how Joel got the amazing returns he did (see bio below).

If you’re more of an ‘I don’t want to become an expert on stock investing; I’m just looking for a simple investing system’ kind of person, Joel Greenblatt’s The Little Book That Still Beats The Market is your hot patootie (Dr. Frankenfurter reference).

This is my copy of the original book. Simple investing at it’s easiest, with an approx. 32% return. Genius!

Quick bio on Joel Greenblatt:

Joel Greenblatt is the founder and a managing partner of Gotham Capital, a private investment partnership that has achieved 40% annualized returns since its inception in 1985.

He is a professor on the adjunct faculty of Columbia Business School, the former chairman of a Fortune 500 company, the co-founder of ValueInvestorsClub.com, and the author of You Can be a Stock Market Genius; and, The Little Book That Still Beats The Market.  Greenblatt holds a BS and an MBA from the Wharton School.

Huh…huh? What’d I tell you?  And who doesn’t want to associate with a guy who named his company Gotham Capital?  I bet Bruce Wayne is on the board!  And his Magic Formula Investing site is free to use!!!

Here’s how Joel Greenblatt’s simple investing system works (did I mention it’s also free!!!)

(this is copied directly from Joel’s book so I may get sued):

If you have questions, he has an FAQ page.

Step 1

Go to magicformulainvesting.com.

Step 2

Follow the instructions for choosing company size (e.g., companies with market capitalizations over $50 million, or $100 million should be of sufficient size.

Step 3

Follow the instructions to obtain a list of top-ranked magic formula companies.

Step 4

Buy five to seven top-ranked companies.  To start, invest only 20 to 33 percent of the money you intend to invest during the first year.  (I recommend either TD Ameritrade or Charles Schwab for a broker.  TD Ameritrade has the Think or Swim software and Schwab has exceptional customer service.)

Step 5

Repeat Step 4 every two to three months until you have invested all of the money you have chosen to allocate to your magic formula portfolio.  After nine or ten months, this should result in a portfolio of 20 to 30 stocks (e.g., seven stocks every three months, five or six stocks every two months).

Step 6

Sell each stock after holding it for one year.  For taxable accounts, sell winners after holding them a few days more than one year (as previously described).  Use the proceeds from any sale and any additional investment money to replace the sold companies with an equal number of new magic formula selections (Step 4).

Step 7

Continue this process for many years.  Remember, you must be committed to continuing this process for a minimum of three to five years regardless of results.  Otherwise, you will most likely quit before the magic formula has a chance to work!  (If you need to understand why, get the book.)

Step 8

Feel free to write and thank Joel Greenblatt.  (By the way, his book is actually funny. Weird!)

This is cropped.  The total number of companies is 30.  This is the definition of simple investing for approx. 32% gain.

This is Joel’s basic Magic Formula for Investing.  (Again, it’s free.)  I highly, highly, highly recommend that you buy the book.  It is short, small (as the title implies) and easy to read and understand (unlike most investment books).  And you will understand why you have to commit to the process for three to five years.

Like any investment strategy, your portfolio will not just go up.  And because it is a long-term strategy, you may lose money in the first year.  Joel explains all of this in the book.

The book also includes the calculations (if you’re interested) he uses to come up with the companies.

Simple Investing System conclusion…

For a system that works without you doing anything except visiting magicformulainvesting.com every three months and picking a few stocks to buy, I know of NO successful investment system this fracking (sci-fi reference) simple!  (By the way, Magic Formula Investing has no affiliate program.  The only affiliate links are the books.)

Get the book: The Little Book That Still Beats The Market by Joel Greenblatt

Or if you’re a total nerd: You Can be A Stock Market Genius by Joel Greenblatt