What Is Magic Formula Investing? Magic Formula Investing is an investment technique that uses a set of quantitative metrics to identify quality businesses available at a discount. It is a systematic ...
Greenblatt's 'magic formula'—combining Return on Capital and Earnings Yield—consistently outperformed the S&P 500 from 2017 to early 2026. Testing the formula on S&P 500 constituents, portfolios of 20 ...
Joel Greenblatt’s Magic Formula method of investing has outperformed the S&P500 over time. Understanding the metrics used in the Magic Formula can be instructive when investing in individual stocks.
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