Joel Greenblatt's Magic Formula Returns 40% Per Year? How To Use Stock Screeners

I hope you had a nice Labor Day weekend! Did you do anything special?

I'll be back on the upload grind this week, so click the bell 🔔 to stay notified of new releases. Thank you for watching!

thanks 3000

Does anyone know how to see the historical companies chosen by the magic formula? (Not the just the most recent quarter on the website). It would be very helpful for my research.

That magic formula is probably curve fitted, that's why these very good results

Thanks

Can you do a video on the top stocks to buy in Pakistan stock exchange ?

how to use the magic formula in the Chinese A or HK market?

But his average return were made from options contracts and special situations, not just magic formula. I watched Tobias Carlisle presentation at talks at google and he said that EV/EBITDA outperform magic formula

In 12 months, when you are supposed to sell stock, there’s a high chance that particular stock is still on the high performing list. So can you hold it?

Any updates on how his stocks are performing ?

WTF?!....how much you can make with uber or a commerce?! i think you can make a 100% per year!

I use Magic Formula to find the tickers, then I go to MacroTrend or Finviz or both and do more research, then if I like what I see, ill do even more digging, to see who their clients are, if people like working there, etc. Still new-ish to the investing side of the house, ive been trading for a few years and wanted to use profits to invest.

Did anyone manage to replicate the magic formula? I tried to backest it with TR Datastream and didn't get any outperformance...

Nice Job! Always enjoy your videos!

Great analysis, can you do vectorvest next

I have read the book and decided to verify the veracity of it. I started in 2014 and got a list of 64 stocks from the website in different capitalisation markets. Today 2019-01-09 I have a result of 22% total gain from starting date August 2014, this does not include the dividends. The SPY has had a total gain of 29% for the same period. 200.00$ in august 2014 and 258.00$ today. In that list I have removed the companies that do not exist anymore, so I would think that the real gain from The Magic Formula would be lower, but maybe they merged, this is why I decided to remove them. So, this not beeing a thorough investigation, the gains might be quite similar or a bit better because of the dividends. I always appreciate your videos

Stock screener told me to buy it

I believe that we can beat the magic formula by quite a bit if we use it as an initial screener and wait until other signals support a time to buy. You would be less diversified, but capture more of the upward momentum stocks and hold them for shorter periods of time. Also, I like the fundamental fact that you can hang onto a bad decision as the main focus is that you are always buying businesses that are generally performing of the best relative to price as compared to the rest of the market.

I literally just finished his audiobook! haha Very interesting concept. I saw one source talking about the returns of this strategy were very low since like 2012. I wanted to look more into this. Youre a mind reader :o

40% in 20 years wow that’s nice


Meanwhile In marijuana industry 100% in a month 😅 😱




2 months later negative -150% 😅

Nice

MJ - I'm a big fan of Greenblatt and his teachings, including his Magic Formula... I've read all his books and would recommend everyone interested in stock investing do the same. In regards to the Magic Formula, I use it much like you, as an 'idea generator'. Why doesn't everyone use the Magic Formula if it's so great? Two reasons... Discipline & Patience. Both far more difficult to practice than magic itself. Thx for the video Michael.

I've never used a stock screener but I might after this video. Thanks!

Can’t you give me some advice in getting subs and viewers? 😸

Why does this intro sound like you're selling something at 2 a.m. on cable TV?

7% is passive. 40% is active work and requires a unicorn 🦄 to consistently achieve

Michael, if you notice, I changed my name , 😉

Very interesting. Thanks for sharing. Yay, I saw Abbie there. :)

Are these free? Or do you have to pay for it?

Magic Formula CAGR 16.2% 1973-2017. It is a combination of EBIT & ROE but the ROE detracts from the performance. EBIT on its own is superior.

Hey Micheal, is there any chance of you making a video about what exactly happens to companies in each industry during an economic correction/recession. I just finished my summer job as a student and wanted to start investing but not sure how I want to diversify due to the record long bull market. Thanks for reading!

Enterprise Value (EV) = Market Capitalization + Perferred Shares + Minority Interests + Long-term Debt - Cash

You know I love me some Greenblatt! 😎