Magic Formula Investing: How To Create a Quantitative Value Stock Portfolio

Описание: Magic Formula Investing was created by Joel Greenblatt as a way to identify and screen for potentially undervalued stocks in the market. Using the Magic Formula stock screener we create 4 stock portfolios that we will be tracking over the next year. The Magic Formula is a rules based, quantitative value investing strategy.

While many people might not be comfortable with a completely rules-based strategy like the Magic Formula for their entire portfolio, it might be worth considering if at least a portion of your investment portfolio could benefit from such a strategy.

Creating a rules-based strategy or component in a portfolio could be a good fit if you are looking for more hands off approach to active investing or a more value oriented approach compared to simply indexing.

I personally use my own rules-based system in my ValueQuant model which I used to rank my per-screened quality stocks based on their relative valuation levels. While I still keep a section of my portfolio for special situation investments and other opportunities, I have found that using the ValueQuant model has simplified my approach to investing a large portion of my portfolio. So far it has worked out quite well!

Overall, no investing system is perfect, but investing systems like the Magic Formula and my ValueQuant model do have their advantages. These include automation, no emotional bias, and process simplification. They can also save you time once implemented, allowing you more time to research other opportunities for the rest of your portfolio.


DISCLAIMER: This video is a resource for educational and general informational purposes and does not constitute actual financial advice. No one should make any investment decision without first consulting his or her own financial advisor and/or conducting his or her own research and due diligence. There is no guarantee or other promise as to any results that may be obtained from using this content. Investing of any kind involves risk and your investments may lose value.