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

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Afterword to the 2010 Edition

IN MY FIRST BOOK I told the story about the peasant who has just been sentenced to death by the king. The peasant kneels before the king and says, "Oh, great and glorious king, if you will only let me live for one more year, I pledge that I can teach the royal horse to talk!" The king, figuring he has nothing to lose, grants the peasant his request. On the way out of the throne room, one of the royal guards pulls the relieved peasant aside and asks, "Why in the world did you promise the king that you could teach his horse to talk? Surely you will fail and the king will have you killed when the year is done!" The peasant turns calmly to the guard and answers, "Well, a lot can happen in a year. Maybe the king will forget about me. Maybe the king will die. Maybe the horse will die. And if I get really lucky, in a year's time, maybe the horse will talk!"

Well, we've had five years since I wrote The Little Book That Beats the Market. I'm not sure whether we've gotten lucky or not, but a lot has happened. The stock market as measured by the S&P 500 index has first risen, then plummeted, and then recovered to roughly where we started five years ago (but still slightly lower than ten years ago). The economy has seen a real estate bubble, a deep recession, and a partial recovery. With all this action in the markets and the economy, what have we learned in the past five years? Would I change anything from the original edition? Would I add anything? How did the ...

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