Estate Planning Investment Strategy
For those of us who find the stock market far more interesting than politics, there's a great book by Joel Greenblatt, The Little Book That Beats The Market, (2006, John Wiley and Sons, ISBN 0-471-73306-7), which provides a proven method for picking stocks which will outperform the Dow . . . and then some.
This is a method which takes the earnings yield (earnings per share divided by price per share) and the return on capital (net operating profit divided by invested capital) for every stock listed on all of the U.S. stock exchanges. These two numbers are used to rank stocks according to those with the best combined earnings yield and return on capital.
It sounds simple, and it is. Plus, you can go to Mr. Greenblatt's website, and the calculations have already been made for you. All you choose is the minimum market capitalization size of the companies.
The most difficult part, as Mr. Greengblatt points out, is sticking with the system. You must be willing to stay with the formula and keep reinvesting using the formula year in and year out.
It's everything I am looking for as an investor -- a proven system with understandable parameters that allows me to choose from a selection of individual stocks. And as we all know, one of the few ways to get a return on your investment that will exceed what inflation and taxes take away is to invest in the stock market. Anyone serious about preserving wealth of any size and planning an estate of any size must develop and implement a winning investment strategy.
