Simple Strategy for Value Investing
What Is Magic Formula Investing?
Magic formula investing refers to a rules-based, disciplined investing strategy that teaches people a relatively simple and easy-to-understand method for value investing. It relies on quantitative screens of companies and stocks, and is designed to beat the stock market’s average annual returns using the S&P 500 to represent the market return. In simple terms, stocks are ranked based on their price and return on capital.
Magic formula investing is a strategy developed by Joel Greenblatt aimed at simplifying value investing. Its goal is to outperform the stock market by using specific quantitative screens. It ranks stocks based on earnings yield and return on capital. However, this only applies…
