Strategy Test – Joel Greenblatt's "Magic Formula"

Strategy Test - Joel Greenblatt's "Magic Formula" by Bargain Value

[timeless]

Today, we are going to test the strategy of the next investing guru – Joel Greenblatt, who published it in his book called: "The little book, that beat the market". In this book you can find the following table with the results:

As we see, over the last 17 years, Magic Formula has earned on average 30.8% annualy. It is an enormous return. In the same time, the S&P 500 has produced only 12.4% annualy. A huge difference of 18.4 percentage points. However, Greenblatt could have some luck, because he was testing his formula during better than average...