Important. Read this before investing in Strategies.
TheMagic Formula and Net-Nets have a very high risk.
Therefore, it is extra important that you do your own analysis of the companies shown in the strategy page.
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.