You're not smart enough and don't have enough time to beat the market
Let me begin by saying that I have always been a huge Joel Greenblatt fan. His first book, You Can Be a Stock Market Genius literally changed the way I invest. It is considered to be the unofficial instruction manual for special situations investing. Greenblatt used its principles to deliver something like 50% annual returns at his hedge fund.
As a big Greenblatt fan, I was really excited to read his new book The Big Secret for the Small Investor. I was actually able to get an advance copy of it.
Unfortunately, as I had feared the book is more of an advertisement for his company, Formula Investing's, new funds than a groundbreaking new investing masterpiece like Stock Market Genius was.
I have to admit that given the fact that I have only had it for a couple of hours I have only had a chance to skim it, but the gist of it seems to be that most individual investors don't have the time or intelligence to invest successfully on their own, so they should allow the managers of certain ETFs and mutual funds, especially "value index" funds, to invest their money for them.
Here's one particular passage from the book that rubbed me the wrong way:
Then again, this is my third investing book. The first one, You Can Be a Stock Market Genius (yes I know, I know), was meant to help the individual investor, too. It didn't. It assumed that investors had a lot of specialized investment knowledge and a lot of free time. (Actually did end up helping a few dozen hedge fund managers, but...). My second book, The Little Book That Beats the Market, gave a step-by-step method for the individual investor to just "do it yourself.". I still believe strongly in this method and I still love the book. But here, too, I missed the boat. As it turns out, most people don't want to do it themselves. Yes, they want to understand it. But they still want someone else to do it for them.
So maybe the third time is the charm...
This statement struck me as somewhat condescending. The book basically seems like a rehash of what has already been said in The Little Book That Beats the Market with a plug for a website called valueweightedindex at the end. That site isn't live yet, but I bet you a dollar that when it is it will direct people to Formula Investing's new mutual funds somehow.
If you were considering buying "The Big Secret" you would be better off saving the $20 and investing it in the great recommendations that are available here in CAPS and at The Motley Fool.
I reserve the right to change my mind after I have thoroughly read the book, but my initial impression of the book is that Greenblatt is basically saying you're not smart enough and don't have enough time to beat the market on your own. Those of us here on CAPS who have consistently outperformed Mr. Market for years know that clearly is not the case.