The Little Blue Book
- Evaluate stocks based on earnings yield and return on capital.
- Pick winning companies by combining these two factors and ranking them — the "Magic Formula."
- Invest in the 20-30 top companies on that list and hold each stock for a year. After a year, sell winners and losers and repeat the process.
- Joel uses the "Magic Formula" as a screen for investing.
- Be patient — it's what makes this formula unpopular, but effective. You can lose for years in a row.
- A Ben Graham-like approach to investing.