Joel Greenblatt - The Little Book That Beats Th... -

The formula can trail the market for 2 or 3 years at a time.

Most people sell when their "Magic" stocks go down, which is exactly when the strategy requires discipline.

Greenblatt’s logic is a blend of Warren Buffett’s "quality" and Benjamin Graham’s "value." He argues that you don't need to be a genius; you just need to find businesses that: relative to what they cost to buy. Generate high returns on the capital they invest. 🛠️ The Two Pillars of the Magic Formula The formula ranks every company on two specific metrics: Joel Greenblatt - The Little Book That Beats th...

Buy the top 20–30 stocks that have the best combined ranking of these two factors. 📈 Does It Actually Work?

This tells you how "cheap" a stock is. It compares a company's profits to its enterprise value. You want a high yield—more bang for your buck. The formula can trail the market for 2 or 3 years at a time

The historical data is staggering. From 1988 to 2004, the Magic Formula returned roughly , compared to the S&P 500’s 12.4%. While it may not always hit those heights today, the core principle—buying quality on sale—remains a foundational pillar of value investing. ⚠️ The "Catch" (Why Everyone Doesn't Do It) If it’s so simple, why isn't everyone a millionaire?

🚀 If you want to try this out, I can help you: Find a free Magic Formula screener online. Break down the step-by-step rules for buying and selling. Generate high returns on the capital they invest

This measures how "good" the business is. It shows how efficiently the company turns its investments into profits. You want a high ROC.