Magic Formula Ranking

What is the definition of Magic Formula Rank?

This is Stockopedia's version of the Magic Formula as defined in Joel Greenblatt's bestselling book "The Little Book that Beats the Market". You can learn more about the Magic Formula in this article and also in our Magic Formula FAQ.


Stockopedia explains Magic Formula Rank...

Joel Greenblatt's Little Book that Beat the Market became a financial publishing phenomenon. In a simple writing style, the successful hedge fund investor showed how picking 'good' stocks at 'cheap' prices was enormously profitable. He claims that a portfolio of the top 30 Magic Formula stocks has averaged a 17-year annual return of 30.8% and beats the S&P 500 96% of the time. It should be noted that these returns are volatile and require a fully diversified portfolio. Greenblatt suggests sticking to A+ stocks (in the top 10%) for the best chance of outperformance and ideally to a basket of the top 50 ranked stocks in the market.


Which Guru Screens is Magic Formula Rank used in?
Quality Investing:

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  • Apple (AAPL)

  • Shell (RDSA)

  • Twitter (TWTR)

  • Volkswagon AG (VOK)

  • McDonalds (MCD)

  • Vodafone (VOD)

  • Barratt Homes (BDEV)

  • Microsoft (MSFT)

  • Tesco (TSCO)
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