{"id":5947,"date":"2022-08-26T08:19:17","date_gmt":"2022-08-26T08:19:17","guid":{"rendered":"https:\/\/rakshithpai.com\/?p=5947"},"modified":"2022-08-26T08:19:30","modified_gmt":"2022-08-26T08:19:30","slug":"magic-formula-investing","status":"publish","type":"post","link":"https:\/\/rakshithpai.com\/magic-formula-investing\/","title":{"rendered":"Magic Formula Investing &#8211; Meaning Features &#038; Benefits Explained:"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-662e925bbc868\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\" style='display:none' id=\"ez-toc-cssicon-toggle-item-662e925bbc868\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/rakshithpai.com\/magic-formula-investing\/#Introduction\" title=\"Introduction:\">Introduction:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/rakshithpai.com\/magic-formula-investing\/#What_is_Magic_Formula_Investing\" title=\"What is Magic Formula Investing?\">What is Magic Formula Investing?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/rakshithpai.com\/magic-formula-investing\/#Understanding_Magic_Formula_Investing\" title=\"Understanding Magic Formula Investing:\">Understanding Magic Formula Investing:<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/rakshithpai.com\/magic-formula-investing\/#Earnings_Yield\" title=\"Earnings Yield\">Earnings Yield<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/rakshithpai.com\/magic-formula-investing\/#Return_on_Capital_Invested\" title=\"Return on Capital Invested\">Return on Capital Invested<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/rakshithpai.com\/magic-formula-investing\/#How_to_Use_Magic_Formula\" title=\"How to Use Magic Formula?\">How to Use Magic Formula?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/rakshithpai.com\/magic-formula-investing\/#Advantages_of_Magic_Formula_Investing\" title=\"Advantages of Magic Formula Investing:\">Advantages of Magic Formula Investing:<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/rakshithpai.com\/magic-formula-investing\/#Easy_to_Use\" title=\"Easy to Use\">Easy to Use<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/rakshithpai.com\/magic-formula-investing\/#Simplicity\" title=\"Simplicity\">Simplicity<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/rakshithpai.com\/magic-formula-investing\/#Stress-Free\" title=\"Stress-Free\">Stress-Free<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/rakshithpai.com\/magic-formula-investing\/#Beats_Benchmark\" title=\"Beats Benchmark\">Beats Benchmark<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/rakshithpai.com\/magic-formula-investing\/#Disadvantages_of_Magic_Formula_Investing\" title=\"Disadvantages of Magic Formula Investing:\">Disadvantages of Magic Formula Investing:<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/rakshithpai.com\/magic-formula-investing\/#Past_Performance\" title=\"Past Performance\">Past Performance<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/rakshithpai.com\/magic-formula-investing\/#Limited_View\" title=\"Limited View\">Limited View<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/rakshithpai.com\/magic-formula-investing\/#Rebalancing\" title=\"Rebalancing\">Rebalancing<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/rakshithpai.com\/magic-formula-investing\/#Ratio_Analysis\" title=\"Ratio Analysis\">Ratio Analysis<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/rakshithpai.com\/magic-formula-investing\/#Conclusion\" title=\"Conclusion:\">Conclusion:<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/rakshithpai.com\/magic-formula-investing\/#Also_read\" title=\"Also read:\">Also read:<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Introduction\"><\/span><strong>Introduction:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Investing, and especially value investing, has a reputation for being a difficult endeavor.<strong> Investing for value entails searching for stocks that are undervalued relative to their true worth and then purchasing those equities at a discount. <\/strong>Investors who focus on value want the stock price to go up until it matches or goes above what the company is really worth. This is called a capital appreciation gain.<\/p>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-1 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background\" href=\"https:\/\/zerodha.com\/open-account?c=PR4768\" style=\"border-radius:50px;background-color:#e4fa00;color:#0f0027\" rel=\"nofollow\"><strong>Open Zerodha Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<p>This can only be done with rock-solid justification and confidence in a stock&#8217;s prospects for long-term growth. <strong>Selecting value stocks entails investigating the many factors that might affect the stock&#8217;s long-term price movement. It takes time and works to create such a solid foundation upon which to rest one&#8217;s investing selections. <\/strong>One option, though, is to follow the plan for investing laid out by a well-known investor and author.<\/p>\n\n\n\n<p>Magic Formula Investing is based on a method that requires following a set of criteria to evaluate companies based on quantitative measures.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_Magic_Formula_Investing\"><\/span><strong>What is Magic Formula Investing?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>The term &#8220;magic formula investing&#8221; is commonly used to describe a set of rules-based, disciplined investment guidelines that aim to instruct investors in a straightforward and user-friendly approach to value investing.\u00a0<\/strong><\/p>\n\n\n\n<p>Using the Nifty 50, Sensex 30, or any such index as a proxy for market return, the strategy employs quantitative screens to identify firms and stocks with the potential to outperform the market over the long term. Price and return on capital are used to rate equities.<\/p>\n\n\n\n<p>Magic Formula Investing explains how to take a cold, calculated, and emotionless approach to value investing. The technique, which was created by the investor, hedge fund manager, and management professor Joel Greenblatt, is only valid for large-cap equities.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Understanding_Magic_Formula_Investing\"><\/span><strong>Understanding Magic Formula Investing:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>The Secret Formula depends on two ratios;<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Earnings_Yield\"><\/span><strong>Earnings Yield<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The first metric is the return on investment (EBIT\/EV). This is calculated by dividing EBIT by the total company value. Earnings yield is calculated by dividing operating income by equity value.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p><strong><em>[EY = EBIT\/EV]<\/em><\/strong><\/p><cite><strong><em>Earnings yield is calculated by dividing operating income by equity value.<\/em><\/strong><\/cite><\/blockquote>\n\n\n\n<p>This ratio can also be expressed as earnings to price, which is a more conventional and understandable form. <strong>EBIT is Greenblatt&#8217;s go-to metric instead of profits because it more fairly compares businesses with varying tax burdens.\u00a0<\/strong><\/p>\n\n\n\n<p>Since EV takes debt into account in addition to equity, it is preferable to the share price. This means that EBIT\/EV is a more accurate indicator of true profits than earnings per share.<\/p>\n\n\n\n<figure class=\"wp-block-embed aligncenter is-type-wp-embed is-provider-rakshith-pai wp-block-embed-rakshith-pai\"><blockquote class=\"wp-embedded-content\" data-secret=\"qHedorLIgY\"><a href=\"https:\/\/rakshithpai.com\/absolute-pe-model\/\">How to Value Stocks Using Absolute PE Model<\/a><\/blockquote><iframe class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; clip: rect(1px, 1px, 1px, 1px);\" title=\"&#8220;How to Value Stocks Using Absolute PE Model&#8221; &#8212; \" src=\"https:\/\/rakshithpai.com\/absolute-pe-model\/embed\/#?secret=aKWuzLJznE#?secret=qHedorLIgY\" data-secret=\"qHedorLIgY\" width=\"200\" height=\"200\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Return_on_Capital_Invested\"><\/span><strong>Return on Capital Invested<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The return on capital may be calculated as follows: Earnings Before Interest and Taxes (EBIT) \/(Net Fixed Assets + Working Capital). <\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p><strong><em>ROIC = [EBIT\/(NFA+WC)]<\/em><\/strong><\/p><cite><strong><em>To figure out the return on invested capital, you divide EBIT by net operating income plus working capital.<\/em><\/strong><\/cite><\/blockquote>\n\n\n\n<p><strong>Earnings per share (EPS) is a more standard and straightforward measure of this concept. Greenblatt prefers EBIT over net income because it lets him compare companies with different tax burdens in a more fair way.\u00a0<\/strong><\/p>\n\n\n\n<p>Since it takes debt into account, equity value (EV) is preferred over the share price. Since earnings per share don&#8217;t show the whole picture of a company&#8217;s financial health, EBIT\/EV is better.<\/p>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-2 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background\" href=\"https:\/\/zerodha.com\/open-account?c=PR4768\" style=\"border-radius:50px;background-color:#e4fa00;color:#0f0027\" rel=\"nofollow\"><strong>Open Zerodha Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_Use_Magic_Formula\"><\/span><strong>How to Use Magic Formula?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Following the guidelines of the Magic Formula Investing strategy will result in a list of stocks with unquestionable worth. Explained in 7 steps;<\/strong><\/p>\n\n\n\n<ol><li>Magic Formula is used only on mid to large-cap well-established companies. Preferably a company with a market capitalization of at least 15 to 20,000 crores.<\/li><li>The use of the Magic formula is not suggested for companies that deal with financial products &amp; high leveraged <a href=\"https:\/\/rakshithpai.com\/best-psu-stocks-to-buy\/\">PSU<\/a> companies. The main reason for avoiding BFSI (Banking, Financial Services, and Insurance) &amp; Public Sector Undertakings is that Mr.Greenblatt wishes to avoid highly leveraged entities.<\/li><li>Preference to Companies with the following metrics;<\/li><\/ol>\n\n\n\n<ul><li>Earnings Yield &#8211; Earnings before interest and taxes (EBIT) divided by enterprise value (EV).<\/li><li>Return on Invested Capital &#8211; Earnings before interest and taxes (EBIT) divided by Net Fixed Asset &amp; Working Capital.<\/li><\/ul>\n\n\n\n<ol start=\"4\"><li>The companies on the list must be ranked according to the best earnings yield and the highest return on capital, which can be done after computing the aforementioned ratios for each stock. Finally, combine the ranks of the two ratios and sort them upwards.\u00a0<\/li><li>After applying the aforementioned filter to the list, you will be left with a manageable subset from which to select the best two or three stocks to buy each month for a whole year.\u00a0<\/li><li>After 12 months, the portfolio must be rebalanced. This is achieved by unloading underperformers before the end of the year and selling overachievers in the new year. The goal of this strategy is to get the most out of the tax breaks that come with long-term capital gains.\u00a0<\/li><li>Repeat the same procedure for as long as feasible.<\/li><\/ol>\n\n\n\n<figure class=\"wp-block-image size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/08\/Magic-Formula-Investing-1-1024x576.jpg\" alt=\"\" class=\"wp-image-5950\" width=\"1057\" height=\"594\" srcset=\"https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/08\/Magic-Formula-Investing-1-1024x576.jpg 1024w, https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/08\/Magic-Formula-Investing-1-300x169.jpg 300w, https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/08\/Magic-Formula-Investing-1-768x432.jpg 768w, https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/08\/Magic-Formula-Investing-1-150x84.jpg 150w, https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/08\/Magic-Formula-Investing-1.jpg 1280w\" sizes=\"(max-width: 1057px) 100vw, 1057px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Advantages_of_Magic_Formula_Investing\"><\/span><strong>Advantages of Magic Formula Investing:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Easy_to_Use\"><\/span><strong>Easy to Use<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Magic Formula is simple rule-based investing. <\/strong>And, since we already have all the required information available in the public domain regarding the ratios needed for Magic Formula, an investor just needs to impediment the same and invest accordingly.<\/p>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-3 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background\" href=\"https:\/\/zerodha.com\/open-account?c=PR4768\" style=\"border-radius:50px;background-color:#e4fa00;color:#0f0027\" rel=\"nofollow\"><strong>Open Zerodha Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Simplicity\"><\/span><strong>Simplicity<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>The biggest benefit of the Magic Formula Investing method is how easy it is to implement. <\/strong>You just need to follow a set of rules and figure out if the investments you make based on those rules match your risk tolerance and desired rate of return.<\/p>\n\n\n\n<figure class=\"wp-block-embed aligncenter is-type-wp-embed is-provider-rakshith-pai wp-block-embed-rakshith-pai\"><blockquote class=\"wp-embedded-content\" data-secret=\"BEP0vyf2nV\"><a href=\"https:\/\/rakshithpai.com\/warren-buffett-rules-of-investing\/\">Five (5) Golden Investment Principles that defined Mr. Warren Buffett!<\/a><\/blockquote><iframe class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; clip: rect(1px, 1px, 1px, 1px);\" title=\"&#8220;Five (5) Golden Investment Principles that defined Mr. Warren Buffett!&#8221; &#8212; \" src=\"https:\/\/rakshithpai.com\/warren-buffett-rules-of-investing\/embed\/#?secret=dZ36LpRPvy#?secret=BEP0vyf2nV\" data-secret=\"BEP0vyf2nV\" width=\"200\" height=\"200\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Stress-Free\"><\/span><strong>Stress-Free<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Magic Formula is an emotionless, purely analytical way of investing. <\/strong>One needs to follow the laid procedure and do nothing apart from what is asked for as per the formula. So, investors need not be emotionally charged when doing the research.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Beats_Benchmark\"><\/span><strong>Beats Benchmark<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Proper usage of Magic Formula has <strong>proven to beat benchmark returns on multiple occasions.\u00a0<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Disadvantages_of_Magic_Formula_Investing\"><\/span><strong>Disadvantages of Magic Formula Investing:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Past_Performance\"><\/span><strong>Past Performance<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Bear in mind that the ratios employed in this method depend on previously collected data. <strong>There is no guarantee that the company&#8217;s operational or financial performance will stay the same or get better.<\/strong> This is because past performance is not a good indicator of future performance and returns.\u00a0<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Limited_View\"><\/span><strong>Limited View<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Market declines, geopolitical unrest, and changes in government policy that affect the market<\/strong> as a whole or the company&#8217;s industry, in particular, are only some of the aspects that aren&#8217;t taken into account by this method.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Rebalancing\"><\/span><strong>Rebalancing<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Rebalancing one\u2019s portfolio every year or half yearly is one of the major components for the formula to work. <\/strong>Failure to shuffle the portfolio by removing underperformers will cost investors dearly. Such constant tweaks will also hinder portfolio growth and the same undermine long-term investing.<\/p>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-4 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background\" href=\"https:\/\/zerodha.com\/open-account?c=PR4768\" style=\"border-radius:50px;background-color:#e4fa00;color:#0f0027\" rel=\"nofollow\"><strong>Open Zerodha Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Ratio_Analysis\"><\/span><strong>Ratio Analysis<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>The entire stock picking strategy is dependent on two major ratios (ROIC &amp; Earnings Yield). <\/strong>Thus, ignoring all other ratios and fundamental, technical tools.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<div class=\"ast-oembed-container \" style=\"height: 100%;\"><iframe loading=\"lazy\" title=\"Key rule of Stock Market Investing! - Mr. Peter Lynch #Shorts\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/WBSEJTMOtFk?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/div>\n<\/div><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><strong>Conclusion:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Overall, it&#8217;s fair to say that the<strong> Magic Formula approach to investing is relatively simple in comparison to other value investing methodologies and that it aids in taking a disciplined, rule-based approach to making investment decisions <\/strong>and exercising patience in order to generate returns over the long term (at least 5\u201310 years).<\/p>\n\n\n\n<p>Keep in mind, however, that <strong>this is not a foolproof plan and is vulnerable to the impact given to your portfolio<\/strong> that the Magic Formula Investing method does not take into account.<\/p>\n\n\n\n<p>The magic formula is an easy-to-understand set of guidelines for generating above-average returns for the ordinary investor. <strong>By using a straightforward procedure, the &#8220;magic formula&#8221; helps investors spot under-or overvalued businesses with ease, rather than being swayed by their gut or their emotions.<\/strong> Even if returns are lower now than when the magic formula was originally released, the strategy may still outperform the market with certain tweaks.<\/p>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-5 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background\" href=\"https:\/\/zerodha.com\/open-account?c=PR4768\" style=\"border-radius:50px;background-color:#e4fa00;color:#0f0027\" rel=\"nofollow\"><strong>Open Zerodha Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<p><strong>Disclaimer: <\/strong>All the information on this website is published in good faith and for general information purposes only.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Also_read\"><\/span><strong>Also read:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><a href=\"https:\/\/rakshithpai.com\/absolute-pe-model\/\" target=\"_blank\" rel=\"noreferrer noopener\">How to Value Stocks Using Absolute PE Model<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/earnings-per-share\/\" target=\"_blank\" rel=\"noreferrer noopener\">Earnings Per Share &#8211; Importance, Types &amp; Features:<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/maximize-mutual-fund-returns\/\" target=\"_blank\" rel=\"noreferrer noopener\">Maximize Your Mutual Fund Investing Returns:<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/dividend-reinvestment-plan\/\" target=\"_blank\" rel=\"noreferrer noopener\">Dividend Reinvestment Plan: Everything You Need to Know<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/inflation-stock-market\/\" target=\"_blank\" rel=\"noreferrer noopener\">Inflation and its impact on the Economy &amp; Stock Market:<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>Introduction: Investing, and especially value investing, has a reputation for being a difficult endeavor. Investing for value entails searching for stocks that are undervalued relative to their true worth and then purchasing those equities at a discount. Investors who focus on value want the stock price to go up until it matches or goes above [&hellip;]<\/p>\n<div class='heateor_sss_sharing_container heateor_sss_vertical_sharing heateor_sss_bottom_sharing' style='width:44px;right: -10px;top: 100px;background-color: Dark Blue' data-heateor-sss-href='https:\/\/rakshithpai.com\/wp-json\/wp\/v2\/posts\/5947'><div class=\"heateor_sss_sharing_ul\"><a aria-label=\"Facebook\" class=\"heateor_sss_facebook\" href=\"https:\/\/www.facebook.com\/sharer\/sharer.php?u=https%3A%2F%2Frakshithpai.com%2Fwp-json%2Fwp%2Fv2%2Fposts%2F5947\" title=\"Facebook\" rel=\"nofollow noopener\" target=\"_blank\" style=\"font-size:32px!important;box-shadow:none;display:inline-block;vertical-align:middle\"><span class=\"heateor_sss_svg\" style=\"background-color:#0765FE;width:40px;height:40px;margin:0;display:inline-block;opacity:1;float:left;font-size:32px;box-shadow:none;display:inline-block;font-size:16px;padding:0 4px;vertical-align:middle;background-repeat:repeat;overflow:hidden;padding:0;cursor:pointer;box-sizing:content-box\"><svg style=\"display:block;\" focusable=\"false\" aria-hidden=\"true\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"100%\" height=\"100%\" viewBox=\"0 0 32 32\"><path fill=\"#fff\" d=\"M28 16c0-6.627-5.373-12-12-12S4 9.373 4 16c0 5.628 3.875 10.35 9.101 11.647v-7.98h-2.474V16H13.1v-1.58c0-4.085 1.849-5.978 5.859-5.978.76 0 2.072.15 2.608.298v3.325c-.283-.03-.775-.045-1.386-.045-1.967 0-2.728.745-2.728 2.683V16h3.92l-.673 3.667h-3.247v8.245C23.395 27.195 28 22.135 28 16Z\"><\/path><\/svg><\/span><\/a><a aria-label=\"Twitter\" class=\"heateor_sss_button_twitter\" href=\"http:\/\/twitter.com\/intent\/tweet?text=%20-%20Save%20-%20Invest%20-%20Repeat&url=https%3A%2F%2Frakshithpai.com%2Fwp-json%2Fwp%2Fv2%2Fposts%2F5947\" title=\"Twitter\" rel=\"nofollow noopener\" target=\"_blank\" style=\"font-size:32px!important;box-shadow:none;display:inline-block;vertical-align:middle\"><span class=\"heateor_sss_svg heateor_sss_s__default heateor_sss_s_twitter\" style=\"background-color:#55acee;width:40px;height:40px;margin:0;display:inline-block;opacity:1;float:left;font-size:32px;box-shadow:none;display:inline-block;font-size:16px;padding:0 4px;vertical-align:middle;background-repeat:repeat;overflow:hidden;padding:0;cursor:pointer;box-sizing:content-box\"><svg style=\"display:block;\" focusable=\"false\" aria-hidden=\"true\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"100%\" height=\"100%\" viewBox=\"-4 -4 39 39\"><path d=\"M28 8.557a9.913 9.913 0 0 1-2.828.775 4.93 4.93 0 0 0 2.166-2.725 9.738 9.738 0 0 1-3.13 1.194 4.92 4.92 0 0 0-3.593-1.55 4.924 4.924 0 0 0-4.794 6.049c-4.09-.21-7.72-2.17-10.15-5.15a4.942 4.942 0 0 0-.665 2.477c0 1.71.87 3.214 2.19 4.1a4.968 4.968 0 0 1-2.23-.616v.06c0 2.39 1.7 4.38 3.952 4.83-.414.115-.85.174-1.297.174-.318 0-.626-.03-.928-.086a4.935 4.935 0 0 0 4.6 3.42 9.893 9.893 0 0 1-6.114 2.107c-.398 0-.79-.023-1.175-.068a13.953 13.953 0 0 0 7.55 2.213c9.056 0 14.01-7.507 14.01-14.013 0-.213-.005-.426-.015-.637.96-.695 1.795-1.56 2.455-2.55z\" fill=\"#fff\"><\/path><\/svg><\/span><\/a><a aria-label=\"Linkedin\" class=\"heateor_sss_button_linkedin\" href=\"https:\/\/www.linkedin.com\/sharing\/share-offsite\/?url=https%3A%2F%2Frakshithpai.com%2Fwp-json%2Fwp%2Fv2%2Fposts%2F5947\" title=\"Linkedin\" rel=\"nofollow noopener\" target=\"_blank\" style=\"font-size:32px!important;box-shadow:none;display:inline-block;vertical-align:middle\"><span class=\"heateor_sss_svg heateor_sss_s__default heateor_sss_s_linkedin\" style=\"background-color:#0077b5;width:40px;height:40px;margin:0;display:inline-block;opacity:1;float:left;font-size:32px;box-shadow:none;display:inline-block;font-size:16px;padding:0 4px;vertical-align:middle;background-repeat:repeat;overflow:hidden;padding:0;cursor:pointer;box-sizing:content-box\"><svg style=\"display:block;\" focusable=\"false\" aria-hidden=\"true\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"100%\" height=\"100%\" viewBox=\"0 0 32 32\"><path d=\"M6.227 12.61h4.19v13.48h-4.19V12.61zm2.095-6.7a2.43 2.43 0 0 1 0 4.86c-1.344 0-2.428-1.09-2.428-2.43s1.084-2.43 2.428-2.43m4.72 6.7h4.02v1.84h.058c.56-1.058 1.927-2.176 3.965-2.176 4.238 0 5.02 2.792 5.02 6.42v7.395h-4.183v-6.56c0-1.564-.03-3.574-2.178-3.574-2.18 0-2.514 1.7-2.514 3.46v6.668h-4.187V12.61z\" fill=\"#fff\"><\/path><\/svg><\/span><\/a><a aria-label=\"Whatsapp\" class=\"heateor_sss_whatsapp\" href=\"https:\/\/api.whatsapp.com\/send?text=%20-%20Save%20-%20Invest%20-%20Repeat https%3A%2F%2Frakshithpai.com%2Fwp-json%2Fwp%2Fv2%2Fposts%2F5947\" title=\"Whatsapp\" rel=\"nofollow noopener\" target=\"_blank\" style=\"font-size:32px!important;box-shadow:none;display:inline-block;vertical-align:middle\"><span class=\"heateor_sss_svg\" style=\"background-color:#55eb4c;width:40px;height:40px;margin:0;display:inline-block;opacity:1;float:left;font-size:32px;box-shadow:none;display:inline-block;font-size:16px;padding:0 4px;vertical-align:middle;background-repeat:repeat;overflow:hidden;padding:0;cursor:pointer;box-sizing:content-box\"><svg style=\"display:block;\" focusable=\"false\" aria-hidden=\"true\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"100%\" height=\"100%\" viewBox=\"-6 -5 40 40\"><path class=\"heateor_sss_svg_stroke heateor_sss_no_fill\" stroke=\"#fff\" stroke-width=\"2\" fill=\"none\" d=\"M 11.579798566743314 24.396926207859085 A 10 10 0 1 0 6.808479557110079 20.73576436351046\"><\/path><path d=\"M 7 19 l -1 6 l 6 -1\" class=\"heateor_sss_no_fill heateor_sss_svg_stroke\" stroke=\"#fff\" stroke-width=\"2\" fill=\"none\"><\/path><path d=\"M 10 10 q -1 8 8 11 c 5 -1 0 -6 -1 -3 q -4 -3 -5 -5 c 4 -2 -1 -5 -1 -4\" fill=\"#fff\"><\/path><\/svg><\/span><\/a><a aria-label=\"Copy Link\" class=\"heateor_sss_button_copy_link\" title=\"Copy Link\" rel=\"nofollow noopener\" href=\"https:\/\/rakshithpai.com\/wp-json\/wp\/v2\/posts\/5947\" onclick=\"event.preventDefault()\" style=\"font-size:32px!important;box-shadow:none;display:inline-block;vertical-align:middle\"><span class=\"heateor_sss_svg heateor_sss_s__default heateor_sss_s_copy_link\" style=\"background-color:#ffc112;width:40px;height:40px;margin:0;display:inline-block;opacity:1;float:left;font-size:32px;box-shadow:none;display:inline-block;font-size:16px;padding:0 4px;vertical-align:middle;background-repeat:repeat;overflow:hidden;padding:0;cursor:pointer;box-sizing:content-box\"><svg style=\"display:block;\" focusable=\"false\" aria-hidden=\"true\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"100%\" height=\"100%\" viewBox=\"-4 -4 40 40\"><path fill=\"#fff\" d=\"M24.412 21.177c0-.36-.126-.665-.377-.917l-2.804-2.804a1.235 1.235 0 0 0-.913-.378c-.377 0-.7.144-.97.43.026.028.11.11.255.25.144.14.24.236.29.29s.117.14.2.256c.087.117.146.232.177.344.03.112.046.236.046.37 0 .36-.126.666-.377.918a1.25 1.25 0 0 1-.918.377 1.4 1.4 0 0 1-.373-.047 1.062 1.062 0 0 1-.345-.175 2.268 2.268 0 0 1-.256-.2 6.815 6.815 0 0 1-.29-.29c-.14-.142-.223-.23-.25-.254-.297.28-.445.607-.445.984 0 .36.126.664.377.916l2.778 2.79c.243.243.548.364.917.364.36 0 .665-.118.917-.35l1.982-1.97c.252-.25.378-.55.378-.9zm-9.477-9.504c0-.36-.126-.665-.377-.917l-2.777-2.79a1.235 1.235 0 0 0-.913-.378c-.35 0-.656.12-.917.364L7.967 9.92c-.254.252-.38.553-.38.903 0 .36.126.665.38.917l2.802 2.804c.242.243.547.364.916.364.377 0 .7-.14.97-.418-.026-.027-.11-.11-.255-.25s-.24-.235-.29-.29a2.675 2.675 0 0 1-.2-.255 1.052 1.052 0 0 1-.176-.344 1.396 1.396 0 0 1-.047-.37c0-.36.126-.662.377-.914.252-.252.557-.377.917-.377.136 0 .26.015.37.046.114.03.23.09.346.175.117.085.202.153.256.2.054.05.15.148.29.29.14.146.222.23.25.258.294-.278.442-.606.442-.983zM27 21.177c0 1.078-.382 1.99-1.146 2.736l-1.982 1.968c-.745.75-1.658 1.12-2.736 1.12-1.087 0-2.004-.38-2.75-1.143l-2.777-2.79c-.75-.747-1.12-1.66-1.12-2.737 0-1.106.392-2.046 1.183-2.818l-1.186-1.185c-.774.79-1.708 1.186-2.805 1.186-1.078 0-1.995-.376-2.75-1.13l-2.803-2.81C5.377 12.82 5 11.903 5 10.826c0-1.08.382-1.993 1.146-2.738L8.128 6.12C8.873 5.372 9.785 5 10.864 5c1.087 0 2.004.382 2.75 1.146l2.777 2.79c.75.747 1.12 1.66 1.12 2.737 0 1.105-.392 2.045-1.183 2.817l1.186 1.186c.774-.79 1.708-1.186 2.805-1.186 1.078 0 1.995.377 2.75 1.132l2.804 2.804c.754.755 1.13 1.672 1.13 2.75z\"\/><\/svg><\/span><\/a><a class=\"heateor_sss_more\" title=\"More\" rel=\"nofollow noopener\" style=\"font-size: 32px!important;border:0;box-shadow:none;display:inline-block!important;font-size:16px;padding:0 4px;vertical-align: middle;display:inline;\" href=\"https:\/\/rakshithpai.com\/wp-json\/wp\/v2\/posts\/5947\" onclick=\"event.preventDefault()\"><span class=\"heateor_sss_svg\" style=\"background-color:#ee8e2d;width:40px;height:40px;margin:0;display:inline-block!important;opacity:1;float:left;font-size:32px!important;box-shadow:none;display:inline-block;font-size:16px;padding:0 4px;vertical-align:middle;display:inline;background-repeat:repeat;overflow:hidden;padding:0;cursor:pointer;box-sizing:content-box;\" onclick=\"heateorSssMoreSharingPopup(this, 'https:\/\/rakshithpai.com\/wp-json\/wp\/v2\/posts\/5947', '%20-%20Save%20-%20Invest%20-%20Repeat', '' )\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" xmlns:xlink=\"http:\/\/www.w3.org\/1999\/xlink\" viewBox=\"-.3 0 32 32\" version=\"1.1\" width=\"100%\" height=\"100%\" style=\"display:block;\" xml:space=\"preserve\"><g><path fill=\"#fff\" d=\"M18 14V8h-4v6H8v4h6v6h4v-6h6v-4h-6z\" fill-rule=\"evenodd\"><\/path><\/g><\/svg><\/span><\/a><\/div><div class=\"heateorSssClear\"><\/div><\/div>","protected":false},"author":1,"featured_media":5949,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[1],"tags":[300,301,299],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Magic Formula Investing - Meaning Features &amp; Benefits Explained: -<\/title>\n<meta name=\"description\" content=\"The term &quot;magic formula investing&quot; is commonly used to describe a set of rules-based, disciplined investment guidelines that aim to instruct investors in a straightforward and user-friendly approach to value investing.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/rakshithpai.com\/magic-formula-investing\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Magic Formula Investing - Meaning Features &amp; Benefits Explained: -\" \/>\n<meta property=\"og:description\" content=\"The term &quot;magic formula investing&quot; is commonly used to describe a set of rules-based, disciplined investment guidelines that aim to instruct investors in a straightforward and user-friendly approach to value investing.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/rakshithpai.com\/magic-formula-investing\/\" \/>\n<meta property=\"article:author\" content=\"https:\/\/www.facebook.com\/Iam.Mrpai\" \/>\n<meta property=\"article:published_time\" content=\"2022-08-26T08:19:17+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-08-26T08:19:30+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/08\/Magic-Formula-Investing.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1280\" \/>\n\t<meta property=\"og:image:height\" content=\"720\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Rakshith Pai\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@Iam_MrPai\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Rakshith Pai\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"7 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/rakshithpai.com\/magic-formula-investing\/\",\"url\":\"https:\/\/rakshithpai.com\/magic-formula-investing\/\",\"name\":\"Magic Formula Investing - Meaning Features & Benefits Explained: -\",\"isPartOf\":{\"@id\":\"https:\/\/rakshithpai.com\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/rakshithpai.com\/magic-formula-investing\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/rakshithpai.com\/magic-formula-investing\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/08\/Magic-Formula-Investing.jpg\",\"datePublished\":\"2022-08-26T08:19:17+00:00\",\"dateModified\":\"2022-08-26T08:19:30+00:00\",\"author\":{\"@id\":\"https:\/\/rakshithpai.com\/#\/schema\/person\/5a10929466befdcdb3013e5341aeb693\"},\"description\":\"The term \\\"magic formula investing\\\" is commonly used to describe a set of rules-based, disciplined investment guidelines that aim to instruct investors in a straightforward and user-friendly approach to value investing.\",\"breadcrumb\":{\"@id\":\"https:\/\/rakshithpai.com\/magic-formula-investing\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/rakshithpai.com\/magic-formula-investing\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/rakshithpai.com\/magic-formula-investing\/#primaryimage\",\"url\":\"https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/08\/Magic-Formula-Investing.jpg\",\"contentUrl\":\"https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/08\/Magic-Formula-Investing.jpg\",\"width\":1280,\"height\":720,\"caption\":\"Joel Greenblatt Magic Formula Investing\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/rakshithpai.com\/magic-formula-investing\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/rakshithpai.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Magic Formula Investing &#8211; Meaning Features &#038; Benefits Explained:\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/rakshithpai.com\/#website\",\"url\":\"https:\/\/rakshithpai.com\/\",\"name\":\"\",\"description\":\"Save - Invest - Repeat\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/rakshithpai.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/rakshithpai.com\/#\/schema\/person\/5a10929466befdcdb3013e5341aeb693\",\"name\":\"Rakshith Pai\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/rakshithpai.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/34b7459182e8fb8b80ca20098eb1e8a9?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/34b7459182e8fb8b80ca20098eb1e8a9?s=96&d=mm&r=g\",\"caption\":\"Rakshith Pai\"},\"description\":\"An Investor, Entrepreneur by profession, and an Economist (Monetarist) by passion. Professional Investor in Equities and other assets. Here to spread the concept of \u201cSane Investing\u201d.\",\"sameAs\":[\"https:\/\/rakshithpai.com\",\"https:\/\/www.facebook.com\/Iam.Mrpai\",\"https:\/\/www.instagram.com\/iam_mrpai\",\"https:\/\/www.linkedin.com\/in\/iam-mrpai\",\"https:\/\/in.pinterest.com\/Iam_MrPai\",\"https:\/\/x.com\/Iam_MrPai\",\"https:\/\/www.youtube.com\/channel\/UC3vfc8G1sysZleCAKbytRFQ?view_as=subscriber\"],\"url\":\"https:\/\/rakshithpai.com\/author\/mrpai27\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Magic Formula Investing - Meaning Features & Benefits Explained: -","description":"The term \"magic formula investing\" is commonly used to describe a set of rules-based, disciplined investment guidelines that aim to instruct investors in a straightforward and user-friendly approach to value investing.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/rakshithpai.com\/magic-formula-investing\/","og_locale":"en_US","og_type":"article","og_title":"Magic Formula Investing - Meaning Features & Benefits Explained: -","og_description":"The term \"magic formula investing\" is commonly used to describe a set of rules-based, disciplined investment guidelines that aim to instruct investors in a straightforward and user-friendly approach to value investing.","og_url":"https:\/\/rakshithpai.com\/magic-formula-investing\/","article_author":"https:\/\/www.facebook.com\/Iam.Mrpai","article_published_time":"2022-08-26T08:19:17+00:00","article_modified_time":"2022-08-26T08:19:30+00:00","og_image":[{"width":1280,"height":720,"url":"https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/08\/Magic-Formula-Investing.jpg","type":"image\/jpeg"}],"author":"Rakshith Pai","twitter_card":"summary_large_image","twitter_creator":"@Iam_MrPai","twitter_misc":{"Written by":"Rakshith Pai","Est. reading time":"7 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/rakshithpai.com\/magic-formula-investing\/","url":"https:\/\/rakshithpai.com\/magic-formula-investing\/","name":"Magic Formula Investing - Meaning Features & Benefits Explained: -","isPartOf":{"@id":"https:\/\/rakshithpai.com\/#website"},"primaryImageOfPage":{"@id":"https:\/\/rakshithpai.com\/magic-formula-investing\/#primaryimage"},"image":{"@id":"https:\/\/rakshithpai.com\/magic-formula-investing\/#primaryimage"},"thumbnailUrl":"https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/08\/Magic-Formula-Investing.jpg","datePublished":"2022-08-26T08:19:17+00:00","dateModified":"2022-08-26T08:19:30+00:00","author":{"@id":"https:\/\/rakshithpai.com\/#\/schema\/person\/5a10929466befdcdb3013e5341aeb693"},"description":"The term \"magic formula investing\" is commonly used to describe a set of rules-based, disciplined investment guidelines that aim to instruct investors in a straightforward and user-friendly approach to value investing.","breadcrumb":{"@id":"https:\/\/rakshithpai.com\/magic-formula-investing\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/rakshithpai.com\/magic-formula-investing\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/rakshithpai.com\/magic-formula-investing\/#primaryimage","url":"https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/08\/Magic-Formula-Investing.jpg","contentUrl":"https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/08\/Magic-Formula-Investing.jpg","width":1280,"height":720,"caption":"Joel Greenblatt Magic Formula Investing"},{"@type":"BreadcrumbList","@id":"https:\/\/rakshithpai.com\/magic-formula-investing\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/rakshithpai.com\/"},{"@type":"ListItem","position":2,"name":"Magic Formula Investing &#8211; Meaning Features &#038; Benefits Explained:"}]},{"@type":"WebSite","@id":"https:\/\/rakshithpai.com\/#website","url":"https:\/\/rakshithpai.com\/","name":"","description":"Save - Invest - Repeat","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/rakshithpai.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/rakshithpai.com\/#\/schema\/person\/5a10929466befdcdb3013e5341aeb693","name":"Rakshith Pai","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/rakshithpai.com\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/34b7459182e8fb8b80ca20098eb1e8a9?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/34b7459182e8fb8b80ca20098eb1e8a9?s=96&d=mm&r=g","caption":"Rakshith Pai"},"description":"An Investor, Entrepreneur by profession, and an Economist (Monetarist) by passion. Professional Investor in Equities and other assets. Here to spread the concept of \u201cSane Investing\u201d.","sameAs":["https:\/\/rakshithpai.com","https:\/\/www.facebook.com\/Iam.Mrpai","https:\/\/www.instagram.com\/iam_mrpai","https:\/\/www.linkedin.com\/in\/iam-mrpai","https:\/\/in.pinterest.com\/Iam_MrPai","https:\/\/x.com\/Iam_MrPai","https:\/\/www.youtube.com\/channel\/UC3vfc8G1sysZleCAKbytRFQ?view_as=subscriber"],"url":"https:\/\/rakshithpai.com\/author\/mrpai27\/"}]}},"uagb_featured_image_src":{"full":["https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/08\/Magic-Formula-Investing.jpg",1280,720,false],"thumbnail":["https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/08\/Magic-Formula-Investing-150x150.jpg",150,150,true],"medium":["https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/08\/Magic-Formula-Investing-300x169.jpg",300,169,true],"medium_large":["https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/08\/Magic-Formula-Investing-768x432.jpg",768,432,true],"large":["https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/08\/Magic-Formula-Investing-1024x576.jpg",1024,576,true],"1536x1536":["https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/08\/Magic-Formula-Investing.jpg",1280,720,false],"2048x2048":["https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/08\/Magic-Formula-Investing.jpg",1280,720,false],"web-stories-poster-portrait":["https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/08\/Magic-Formula-Investing-640x720.jpg",640,720,true],"web-stories-publisher-logo":["https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/08\/Magic-Formula-Investing-96x96.jpg",96,96,true],"web-stories-thumbnail":["https:\/\/rakshithpai.com\/wp-content\/uploads\/2022\/08\/Magic-Formula-Investing-150x84.jpg",150,84,true]},"uagb_author_info":{"display_name":"Rakshith Pai","author_link":"https:\/\/rakshithpai.com\/author\/mrpai27\/"},"uagb_comment_info":0,"uagb_excerpt":"Introduction: Investing, and especially value investing, has a reputation for being a difficult endeavor. Investing for value entails searching for stocks that are undervalued relative to their true worth and then purchasing those equities at a discount. Investors who focus on value want the stock price to go up until it matches or goes above&hellip;","_links":{"self":[{"href":"https:\/\/rakshithpai.com\/wp-json\/wp\/v2\/posts\/5947"}],"collection":[{"href":"https:\/\/rakshithpai.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/rakshithpai.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/rakshithpai.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/rakshithpai.com\/wp-json\/wp\/v2\/comments?post=5947"}],"version-history":[{"count":5,"href":"https:\/\/rakshithpai.com\/wp-json\/wp\/v2\/posts\/5947\/revisions"}],"predecessor-version":[{"id":5956,"href":"https:\/\/rakshithpai.com\/wp-json\/wp\/v2\/posts\/5947\/revisions\/5956"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/rakshithpai.com\/wp-json\/wp\/v2\/media\/5949"}],"wp:attachment":[{"href":"https:\/\/rakshithpai.com\/wp-json\/wp\/v2\/media?parent=5947"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/rakshithpai.com\/wp-json\/wp\/v2\/categories?post=5947"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/rakshithpai.com\/wp-json\/wp\/v2\/tags?post=5947"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}