Magic formula

The investment strategy "The Magic Formula" is based on Joel Greenblatts "A Little book that beats the stock market".

The formula tries to find low values companies, with high returns, using two key Ratios. 


1-return on Capital (ROC) = ebit/invested Capital

2-Earnings Yield (EY) = Ebit/ev Formula


First sorts all companies with high return on investment (ROC) and then the lowest valuation using the EY.

By summing the ranking, you get the best shares at the lowest score, at the top of the List.


Historical performance  

You can test how ‘The Magic Formula’ has performed historically and also see a detailed history of what companies were bought and sold each year and what yield you would have received.

You can also select dates, the number of companies, reinvestment of dividends and deselect the Finance & Property Industry that does not fit the formula.


Backtest