저자: 미상 · 외국인
요약 보기
그린블랫의 『The Little Book That Still Beats the Market』을 소개하며 마법공식(자본수익률 높은 우량기업 + 이익수익률 높은 저평가 기업을 순위 합산)을 설명. 잭슨의 껌가게 예로 높은 자본수익률의 중요성, 미스터 마켓 비유로 저가 매수 기회를 강조. 17년 테스트에서 시장 평균의 약 2배 수익이라 언급하나 5개월 중 7개월은 시장 하회, 4년 중 1년은 손실, 최대 3년 연속 부진 가능성도 경고. 20~30종목 분산과 세금 절감(손실 종목 연말 전 매도) 기법도 소개.
다듬은 글
Okay, let's break it down and understand what if I told you that we can beat the sharpest minds on Wall Street, meaning those with big degrees and supercomputers, with just sixth-grade math. Yes, it sounds completely absurd, but that is exactly what we are going to find in today's in-depth discussion.
Exactly, today we have Joel Green Black's book The Little Book That Beats the Market. From its pages we will extract a formula that is surprisingly straightforward. And the most interesting thing here is that this magic formula of Green Black is not just about balance sheets or confusing statistics.
Well then what else is it about? If we go deeper into it, this formula completely takes advantage of human psychology. This means it explains how the market works and how educated fund managers get caught in their own trap, and the common people can take advantage of the same. Greenblatt also begins this book in a very entertaining way.
He does n't talk about the stock market directly. Yes, he tells the story of his childhood, does n't he? He explains exactly how he used to order unnecessary items from the Johnson Smith Company catalog. Like itching powder or fake dog vomit. I mean, it's just childish mischief, but then he bought a 10-foot-tall weather balloon.
He and his brother turned the vacuum cleaner upside down and sucked hot air into the balloon. Come on, I know where this is going. Yes, the balloon flew straight into a tree branch and exploded. Money runs out in seconds. This story is definitely funny. But this misses the very root cause of investment.
That's right , I mean we all know why wasting money like this or just hiding it under the mattress is harmful. Because inflation eats away at the value of money, not exactly, but Greenblatt takes it a step further. He says that if we are to invest, we must have a yardstick, a baseline, to measure against.
What is a good baseline? That baseline is the 10-year US government bond. Let's assume that this bond gives us a six percent return. Hmm, let's break it down a bit. Government bonds mean that we are lending money to the US government. The government is not going to sink. This money is completely safe.
Risk-free. That means if I were to get a six percent profit without doing anything and taking any risk, it would be like a qualifying jump in sports. That's a perfect example. If a company says to invest money in our business, the first question will be whether you will earn more than 6 percent. If not, why should we risk money?
We will just quietly buy government bonds, right? And to understand the answer to this question, the example of Jason's gum shop given in the book is very effective. Oh yes, the story about Jason. Yes, Jason is a sixth grade student. Who sells chewing gum at school. He would buy a 25-cent pack that contained five gummies.
Well, then he sells it to his friends for 25 cents a piece. This means that he earns a net profit of one dollar per packet. Wow, this is an amazing business model. Right now, when Jason grows up, he will turn this small business into a big store. And this is where the real math begins. Let's say Jason has to invest $100,000 to open a new store.
Yes, which includes everything from shop rent to furniture. Yes, but that store was running so well that after deducting all expenses, he was making a profit of $200,000 every year. Yes, two hundred thousand dollars. If we calculate that by investing four lakhs, we earn two lakhs. This is a direct return of 50 percent on our invested capital.
50 percent and if we compare it to that 6 percent government bond, Jason 's company is a gold mine. Absolutely, this is a wonderful business. But the book also gives the example of a store called Just Broccoli, which is completely opposite to this. Ah, just the name broccoli sounds a little boring. Yes, and it costs just 19 paise to open this store, that is, 400,000 dollars, but this store earns only 10 paise in profit after working hard all year.
Yes, by investing only 104 lakhs, it is only two and a half percent return. Where the government was giving six percent without doing anything, taking a risk of 4 lakhs and earning only two and a half percent is not a business, it is a waste of capital. Exactly, this explains to us what a good company really is.
A good company is one that gives a high return on the money invested in its business, i.e. high return on capital. In theory, it seems very easy. Find Jason's shop. Avoid Broccoli's shop. But here is a page. Okay, if Jason's company is so good, why would Jason give us a share of his business so cheaply?
This is a very good question. Maybe he says that if you want to take a share, you will have to pay a very high price and if the price is too high, then no matter how good the company is, the investment will be ruined. This is where the real psychology of the stock market enters. It's one thing for a company to be good, but what its share price is is another.
Yes, the price should also be right. To understand this, Greenblatt uses his mentor Benjamin Graham's concept of Mr. Market. This concept is the best way to understand the ups and downs of the market. I found the concept of Mr. Market very interesting. Imagine that you have a partner named Mr. Market and his mental state is slightly unstable.
Yes, he is very emotional. Every morning he comes to the door and offers to either buy my share or sell me your share. When he is very happy, he feels that the business will touch the sky, then he values the company very high. But when he is scared or hears bad news, he becomes desperate and is ready to sell the same stake for a pittance.
The power of this story of Mr. Market is that there is no pressure on us to accept his offer. We can ignore him. Meaning we can wait until they are considered cheap. The market is actually a mix of crowd sentiments. In the short term, people's fear and greed drive prices far above or below the real value.
But in the long run, the market is always rational. He definitely recognizes the true value of the company. Green Blood's magic formula seeks exactly this opportunity. It works on two scales. The first is high returns on the same capital. The one we talked about in Jason's shop. This tells us how high quality the company is.
Yes, how good is the quality and what is the second criterion because finding a good company alone is not enough, we have to see how much that mill has been worth. The second metric, correctly said, is high earnings yield. This tells us how much the company is earning compared to its share price. Let's explain it in a simpler way.
Suppose a company's share price is $100 and it is earning $10 per share, then its earnings yield is 10 percent. Well, if we compare this 10 percent with our 6 percent government bond, we will know whether this share is cheap or expensive. The exact formula emphasizes both of these things. This means that the company's quality should also be good and, due to Mr.
Market's stupidity, it should also be available at a low price. Green Black has created a very simple system to implement this. It takes data from the 3,500 largest companies in America. First, he ranks all 3500 companies based on quality. The best company is right at number one. Then he ranks them based on how cheap they are.
The cheapest company is ranked number one and then he adds the two ranks. Suppose a company is ranked 232nd in quality but 153rd in being cheap. Yes, his total score became 385. The formula simply selects the companies with the lowest total score. This means that these are companies that are doing excellent business and are also getting discounts due to the fear of Mr.
Market. Absolutely and you know what the most amazing thing here is ? This formula does not attempt to make any predictions. Wall Street and analysts spend day and night making predictions about what the company will do next year, which are often wrong. True, but this formula only picks up the actual earnings figures for the previous year.
The book states that in a 17-year test, this formula nearly doubled the average market return. Double wow, but after coming here, a question was swirling in my mind. Tell me, if this formula is so successful, if it can blow away professionals in 17 years, then why doesn't everyone use it? This is a very reasonable question.
Meaning, if it's that easy that a computer program will create a rank and we will become rich, then why hasn't every manager on Wall Street become a billionaire? Because there is a huge flaw in this formula. The flaw is that it doesn't always work. In fact, sometimes it doesn't work for months or years at a time.
Well, the data in the book shows that this formula lags behind the general market five months out of every 12. It causes damage one out of every four years. That means it's a pretty big risk. Sometimes, it has even happened that this formula could not beat the market for three consecutive years. Wait, wait, three years in a row, three years.
Now think honestly. From a psychological perspective, someone invested their life's savings in this formula. The first year, the money was sinking. The second year, at Thanksgiving dinner, a relative was telling them that he had doubled his money in a normal company, and here we are still in loss. The third year also, the situation is the same.
Absolutely this is hard to bear. Is it really possible for the human brain to tolerate this pain? Any ordinary person, let alone a professional, will throw it in the trash after three years. This is the biggest secret. This is the pain that keeps pain and professionals away from this formula. If it made a profit every year, everyone would adopt it.
Yes, and then the demand for cheap companies increases, the price skyrockets, and the formula stops working. The wise fund manager says, " Well, what's his story?" He starts his own new investment firm. The strategy was brilliant but his fund performed very poorly for the first three to four years. Then the patience of the clients must have been exhausted.
Yes, they felt that this man had lost his skills. Almost all the clients withdrew their money and fled. That was very bad. But that fund manager was confident in his strategy. He didn't change his method. And over the next five or six years, his strategy was so successful that he broke all Wall Street records.
Wow, the fruit of patience is sweet. Yes, today he manages a fund worth over $10 billion, but surprisingly, only four of his initial clients stuck with him until the end. Only four people show why professional fund managers cannot use this formula. They have accountability pressures. Of course, if they perform poorly for two or three years, they will lose their job.
They cannot take the risk of standing out from the crowd. Well, this simply means that Wall Street can't help us. They ca n't play the long game. Greenblatt is right in stating this very clearly that there is no tooth fairy on Wall Street. This means that no magician will come at night and put money under our pillows.
We will have to take charge ourselves. Yes, stock brokers only sell commission-based products. Due to the large number of shares in mutual funds, returns remain average and index funds also give only average returns. But doing the work yourself doesn't mean we blindly buy anything. The book also gives a warning to the general public.
Of course, she warns against ever trying to pick individual stocks yourself. Choosing stocks without information. Yes, you may survive, but you will still be called a fool. This is a very remarkable example. If you do n't understand business, don't consider yourself an expert who will choose five or eight companies and sit down.
So what is the advice for the general public? Green Blood advises building a portfolio of 20 to 30 stocks through the magic formula. This reduces the risk. Good means that even if one or two companies perform poorly, the rest of the companies will lift the average up. This formula definitely keeps us within a safe range without any high degree of risk.
And when we build a portfolio of 20-30 stocks, a very effective tax saving technique also comes into play. Oh, how does the tax thing work? At the end of the year, some of your stocks will be making a profit and some will be making a loss. The technique is to sell the stocks that are making a loss a few days before the end of the year.
What will happen to this? This will count the loss as a short-term loss, which gives a deduction in income tax payable to the government. Okay, so what should we do with the stocks that are making profits ? Sell them a few days after the completion of a year because as soon as a year passes, it becomes a long-term capital gain on which the tax is very low.
This small adjustment can make a huge difference in total profits in the long run. This is truly practical information. Absolutely. If we try to summarize this entire discussion today, what do we get ? We saw that investing is not magic. Yes, we understood through Jason's shop how important it is to find a highly profitable business that gives a return higher than a 6 percent government bond.
And we learned from Mr. Market's feelings about when to make a purchase. The formula gives us all this on a plate: buying good companies cheaply. But the most important thing that everyone should have is patience. The stock market is not a 100-meter race, it is a marathon. Patience is absolutely essential.
No matter how good the formula is, it takes time for Mr. Market to realize his mistakes and recognize the true value. Sometimes it can take two or even three years. This means that without patience, no matter how many good shares we buy, we will end up incurring losses. That's right. Coming here, one last thought arises in my mind.
The most surprising thing is that the real reason for the success of this magical formula is not any financial magic or mathematics. Well then, the real reason for its success is our own human nature. As long as there is a rush to get rich quick within a person, as long as there is a lack of patience, Mr.
Market's mistakes will continue to be made and this formula will continue to work. Wow, this is a very deep thing. The question is not whether this formula works or not, the question is whether we can defeat our own nature. If you found this information useful, then definitely subscribe to the channel Intelligent Sardar.
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