저자: 미상 · 외국인
요약 보기
조엘 그린블랫의 마법공식 소개 영상. ROC(자본수익률)로 우량기업을 고르고 이익수익률(EBIT 대신 주당이익/주가)로 저평가를 판단하는 방식을 설명. 책의 백테스트(1988~2004, 연 30.8% vs S&P500 12.3%)와 3년 연속 손실 없음(169개 구간) 등 수치를 인용. 다만 약 4년에 1년, 월 기준 약 5개월은 시장 대비 부진했고 3~5년 이상 보유 인내가 필요하다고 강조. 특정 종목이나 시장 방향에 대한 예측은 없음.
다듬은 글
Welcome to the deep dive. Today we're trying to simplify something that, well, often feels incredibly complicated. How to get better investment returns without needing some secret insider knowledge or, you know, a PhD in finance. Exactly. We're diving into Joel Greenblat's approach. He laid it all out in his book, The Little Book That Still Beats the Market.
And this isn't just theory from an armchair investor, right? Greenblat founded Gotham Capital, a really successful hedge fund. He's also taught investing at Columbia Business School, so he knows the complex stuff. But the amazing thing is he managed to boil it down. He says he wrote the book so his own kids could get it using like sixth grade math.
Yeah. And that's kind of the whole point, isn't it? To cut through the jargon. His mission for regular investors like you is pretty straightforward. Find good businesses that the market is uh basically selling off cheap for a lot less than I think it's worth, as he puts it. And he turned that idea, that value investing core into an actual formula.
Something systematic, non-emotional, two simple metrics. That's the magic formula. It's designed to take the guesswork and frankly the panic out of investing. It just focuses on finding quote above average companies at below average prices systematically. Okay, let's break that down. Finding the above average or good companies first.
What's Greenblat's main way of measuring quality? How does he tell if a business is genuinely, you know, special? The key metric he uses is return on capital or ROC C. That's the heart of identifying quality. It um essentially measures how much profit a company makes compared to the actual money, the capital that was needed to build the business in the first place.
Think assets, equipment, that sort of thing. So, it's about efficiency, like how much profit does each dollar invested in the business actually generate each year? Precisely. Greenblot uses a simple analogy in the book Jason's Gum Chops. Imagine Jason spends, say, $10,000 setting up his gum business, machines, inventory, everything.
Okay? And let's say he consistently makes $5,000 in profit each year from that initial investment. That's a 50% return on capital. That's really high. 50% is huge. It is. And a business that can sustain that kind of higher OC usually has something special going for it. A strong brand people trust, maybe some unique technology, or perhaps they just dominate their market niche.
It's something that keeps competitors at bay and allows them to keep making those high returns. It's like having a competitive moat, right? Protecting its profitability. Exactly. Like a moat. And crucially, these companies often have the chance to reinvest their earnings back into the business at those same high rates.
That's what drives powerful long-term growth. Okay? So, you find these great high businesses, but we all know even the best company can be a terrible investment if you overpay. So, how does the formula handle the price side? How does it make sure you're getting a bargain? Right? That's the second crucial part.
Earnings yield. This metric tackles the price. Earnings yield is pretty simple to calculate. You take the company's earnings per share and divide it by the current stock price per share. Ah, so it's basically the inverse of the PE ratio, the price to earnings ratio, which maybe more people have heard of.
Exactly that. When the earnings yield is high, it tells you you're getting a lot of earnings power for the price you're paying. You're essentially buying those highquality profits that high row C at a discount. So the magic formula systematically ranks companies looking for the ones that score best on both high return on capital and high earnings yield.
That's the core logic. It finds the intersection of quality and value. It identifies these really good businesses that for whatever reason the market is offering on sale. Which brings us to the idea of Mr. Market. This is how these bargains even appear in the first place, right? Because the market isn't always rational.
Not at all. Mr. Market is this fantastic character that Benjamin Graham, who is Greenblat's inspiration and Warren Buffett's mentor, came up with. Think of Mr. Market as your business partner, but he's completely bipolar. Okay? Some days he's euphoric and wildly optimistic, and he'll offer to buy your share of the business for way more than it's worth.
Other days he's panicking, depressed, convinced the sky is falling, and he'll offer to sell you his share for practically nothing. Then he's on the dollar. Yeah, exactly. His mood swings, driven by fear and greed, not by the company's actual performance, create these incredible opportunities. The formula lets you ignore his moods and just focus on the underlying value.
When Mr. Market is having a bad day and offering great companies cheap, the formula says, "Buy." It's fascinating because the principle buy good stuff when it's cheap is ancient wisdom, but Greenblat made it systematic, measurable, took the gut feeling out of it. And the historical evidence backing this systematic approach is well, it's pretty compelling.
We really need to look at the numbers from the studies he did. Let's do that. The book details a big study, right? Covering 17 years from 1988 to 2004. What did it find? What kind of returns did the magic formula portfolio generate? The results were uh quite remarkable. Over that 17-year period, the portfolio of stocks selected by the magic formula achieved an average annual return of about 30.8%.
30.8% per year for 17 years. That sounds almost too good to be true compared to typical market returns. How did the overall market do during that same time? The general market, like the S&P 500 index, returned around 12.3% per year during that period. Wow. So, more than double the market average. Significantly more.
The power of compounding makes that difference enormous over time. Greenblat uses an example. If you started with say $11,000, okay, and you got the market's 12.2% return for 17 years, you'd end up with around $79,000. Not bad. But if you got the formula's 30.8% return on that same $11,000, you'd have over $1 million.
Over a million from 11,000. That really drives home the difference. But, you know, the immediate question is risk. Usually to get those kinds of high returns, you have to take on a lot more risk, right? Did the study look at that? It did, and that's one of the most striking findings. Greenblat emphasizes that the magic formula achieved these superior returns with less risk, not more, compared to the market averages.
Less risk. How do they measure that? One key piece of evidence is consistency. They looked at rolling three-year periods throughout that 17-ear span. There were 169 different three-year windows they tested. And in none of those 169 three-year periods did the Magic Formula portfolio lose money. Zero negative periods over 3 years.
Never lost money over any three-year stretch while averaging over 30% a year. That's incredible. It really argues against the idea that this was just luck or riding one big wave. Exactly. It suggests the underlying principle is robust. And they also tested it across different slices of the market. the largest 3500 companies, the largest 2500, the largest 1,000.
The formula worked consistently well regardless of company size. It wasn't just picking obscure micro caps or something. Okay, so let's recap. We have a formula. It's based on simple logic by good companies cheap. The math isn't hard. The historical results are staggering high returns, lower risk, consistent performance.
Which leads to the giant blinking question. Why isn't everyone using it and getting rich? Exactly. If it's this good and this simple, what's the catch? And there is a catch. But it's not in the math or the logic. The catch is entirely psychological. It's about us humans. Ah, so it's easy to understand maybe but hard to actually do.
Extremely hard to do. This brings us to the critical psychological barrier. The formula works beautifully over the long term, but it often looks terrible in the short term. How bad is terrible? How often does it lag behind the market? Greenablat is very upfront about this. Despite that amazing long-term average, the magic formula historically underperformed the overall market in roughly one out of every four years.
So about 25% of the time for a whole year, you'd be doing worse than just buying an index fund. One year out of four and month to month. Month to month, it was even more frequent. On average, the formula did worse than the market and about 5 months out of every 12. Okay, wait. Let that sink in. You adopt this strategy believing in its 30% long-term potential.
But almost half the time, month by month, you're underperforming. And sometimes that underperformance lasts for a year, maybe even longer. Yes. And that's where people fail. Imagine watching your portfolio lag the market month after month, maybe for 12 months, 15 months, 18 months straight. Even if you intellectually know the long-term data, the emotional pressure to ditch the strategy and do something else becomes immense.
You start doubting, thinking maybe this time it's different. Maybe the formula is broken now. Precisely. It requires enormous discipline and conviction to stick with it through those inevitable rough patches. Greenblat tells a story about a successful money manager using this exact type of discipline valuebased strategy.
Yeah, he hit a prolonged period of underperformance early on. It lasted maybe a year or two. And what happened? The vast majority of his clients couldn't take it. They panicked, pulled their money out, and probably moved it to whatever fund was hot at that moment. Oh no. Let me guess what happened next.
You got it. Almost immediately after they fled, the manager strategy roared back to life and started crushing the market again, delivering those superior returns. The clients missed the whole recovery and the long-term gains because they couldn't endure the temporary pain. They bailed at the worst possible time.
So, the failure wasn't the strategy. It was the investor's lack of patience. That's the core message. The real edge in this strategy isn't secret information or complex analysis. It's the mental fortitude. It's the ability to stick to a logical plan even when it feels uncomfortable or looks wrong in the short term.
So, what kind of time commitment are we talking about? If you want this to work, how long you absolutely have to stick with it? Greenblat is clear. You need a minimum commitment of three to five years. Minimum. Ideally, you should be thinking much longer like five to 20 years. You need to give the market time to eventually recognize the value in the stocks the formula picks.
And that value recognition, that process of Mr. Market coming to his senses about a particular stock usually takes how long? Typically, he says it takes around 2 to 3 years for the market price to catch up with the underlying value. So, if you're checking your performance every month or even every quarter, you're basically setting yourself up for failure.
You're focusing on the exact time frame where the strategy is most likely to look bad. That makes implementation our next section incredibly important because if you do have the stomach for it, the discipline for that 3 to 5 year plus commitment. How do you actually put this into practice? Okay, practical steps.
First, diversification is key. You can't just buy one or two magic formula stocks and expect that 30.8% average. Individual stocks are way too volatile, right? One company could have unexpected bad news. Exactly. To get the statistical benefit of the average, you need a portfolio of 20 to 30 different stocks selected by the formula.
That diversification smooths out the ride and increases the odds of capturing the overall positive performance. 20 to 30 stocks. That sounds like a lot for an individual investor to manage. Do you buy them all at once? No. He advises against buying them all on day one. You might accidentally buy everything right at a market peak.
The recommendation is to build the portfolio gradually. How gradually? Add maybe five to seven of the top ranked stocks every few months. Spread your purchases out over, say, 9 to 12 months until you reach your full portfolio of 20 or 30 stocks. Okay, that makes sense. Staggering the entry points. Now, what about holding them?
How long do you keep these stocks before you sell and replace them with new ones from the formula? The general rule is you hold each stock for about one year. The formula rankings change over time as earnings and prices fluctuate. So after a year, you rerun the screen, sell the stocks that no longer rank highly and replace them with new top ranked ones.
Just a simple one-year holding period roughly roughly. But there's a really important tactical layer Green Blat adds, especially if you're investing in a regular taxable brokerage account, not an IRA or 401k. It's about tax efficiency. Uh taxes always important. What's the advice there? It hinges on that one year mark.
In the US, if you sell a stock you've held for one year or less at a profit, that gain is considered a short-term capital gain. And short-term gains are usually taxed at your ordinary income tax rate, which can be quite high. Right. But if you hold it for longer than a year, longer than 12 months, yes.
Then any profit becomes a long-term capital gain, which is taxed at significantly lower rates for most people. Okay. So, how does that affect when you sell the magic formula stocks? It leads to this specific tactic. If one of your magic formula stocks is losing money as it approaches the one-year mark, consider selling it before you hit 12 months.
That way, you can claim the capital loss, which can offset other gains or even some ordinary income, potentially saving you taxes. Sell losers before one year. Got it. What about the winners? If a stock is a winner, if it has gone up in price, try to hold it for just over 12 months before you sell it.
That way, the profit qualifies for the lower long-term capital gains tax rate. This simple timing adjustment can make a noticeable difference in your actual take-home returns. That's really practical advice linking the formula mechanics to tax strategy. Okay. And finally, how does someone actually find these high roy high earnings yield stocks?
Do you need expensive software? No. And that's part of the beauty of it. Greenblat actually set up a website magic formulainvesting.com specifically to help people implement this. It runs the screen based on the methodology used in the book and provides the ranked list of stocks for free. For free. Yep.
It removes the barrier of needing to calculate ROC and earnings yield yourself for thousands of companies and makes the strategy accessible to pretty much anyone with internet access. So, pulling it all together, the entire strategy really distills successful investing down to just those two things.
Find quality businesses using return on capital and buy them cheap using earnings yield. That's the essence. And have the patience to let it work. It's about understanding that the market, Mr. Market, is often irrational and using that irrationality to your advantage by sticking to a logical, proven system.
It shows that beating the market doesn't necessarily require more complexity. It requires more discipline. Which brings us to a really interesting final thought for you, the listener. If this magic formula proves that superior returns come from simple math combined with, let's face it, extraordinary patience, then maybe the biggest limit on your investment success isn't the market itself,
right? Maybe it's not about finding the perfect stock picking tool or the next hot trend. The real challenge is internal. It raises the question, are your potential returns being capped more by market volatility or by your own willingness or unwillingness to stick to a sound strategy through thick and thin for that essential 3 to 5year period or even longer?
Talk about that. If you bail on a proven strategy after 18 months of underperformance, are you blaming the market or are you confronting the limits of your own patience? Yes. Something to really consider next time Mr. market throws a tantrum and offers you a bargain.
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