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hi friends welcome back to the channnel here we simplify the world of investing for you today we're diving into the little book that still beats the market by Zoel green blood a modern classic that reveals a surprisingly simple formula for beating the stock market this book distills the complex world of investing into an easy to follow system making it perfect for beginners and seasoned investors alike curious about this magic formula let's get started Joel green Blood starts by addressing a crucial issue why most investors fail to build the market he explains that emotional biases lack of discipline and over complicating the process often lead to poor decisions green blood's goal is to strip away the noise and provide a clear logical and repeatable method for stock selection the key a formula based on fundamental principles of value investing the heart of green Bloods strategy is the magic formula which focuses on two metrics the first one earnings yield this measures how th a stock is it's calculated as earnings before interest and taxes that is a bit divided by Enterprise value second is return on Capital that is Roc this measures how efficiently a company generates profits relative to the capital it uses in simple terms the formula helps you find companies that are both undervalued that is cheap stocks and efficient great at turning investments into profits applying the magic formula is surprisingly simple here is the step by step process identify a universe of stocks such as midcap and large cap companies rank all the stocks by their earnings higher is the veter rank all the stocks by the return on Capital that is here also higher is the betterer then combine these two rankings stocks with the best combin scores are your topics green blood recommends holding 20 to 30 of these stocks equal weighted for a year before rebalancing this ensures diversification while keeping the process manageable so here is the catch the magic formula does not guarantee success every year in fact green blood wants that there will be periods when the formula underperforms the Market but over the long term it has consistently delivered super Superior returns than the index patience and discipline are critical take to the formula trust the process and avoid the temptation to deviate based on shortterm Market Ms one of the most refreshing lessons from Green blood's book is the power of simplicity you don't need a degree in finance or hours of analysis every day to succeed in investing the magic formula does the heavy lifting for you allowing you to focus on the bigger picture Building Wealth over time so let's recap join green green Bloods the little book that still beats the market the first one most in investors fails due to emotional biases and lack of decision play the second the magic formula identifies stocks that are cheap and profitable using two metrics that is earning seial and return on Capital the third diversify by investing in in 20 to 30 top rank stocks and rebalance annually the fourth patience and discipline are key to long-term success the five Simplicity of an out outperforms complexity in the investing world this book is not about changing quick GES it is about following a proven logical process to grow your wealth steadily over time join green Bloods reminds us that investing doesn't have to be complicated the magic formula provides a road map for success but it is up to you to stay disciplined and stick to the plan have you tried the magic formula or do you use another strategy let me know in the comments below if you found this breakdown helpful give it a thumbs up subscribe and hit the Bell icon so you never miss an in on investing tip until next time invest wisely and live richly don't forget to read this book thank you
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