저자: 미상 · 외국인
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결론: 조엘 그린블라트의 마법공식(Magic Formula)은 저평가(이익수익률)와 우량성(자본이익률)을 결합한 규칙 기반 투자법으로, 과거 성과가 우수했다는 주장이다. 마법공식의 개념: 이익수익률(EBIT/기업가치)과 자본이익률(EBIT/순고정자산+순운전자본)을 함께 사용해 싸고 좋은 기업을 고른다. 그린블라트 백테스트: 1998~2009년 연 23.8%로 S&P500 9.6%를 상회; 1988~2004년 연 30.8% 주장(16년 중 하락 1년). 인도 적용: 시가총액 5000억 루피(약 5000크로어) 이상, 금융·공기업 제외, 해외기업 제외 후 약 391개 종목에 적용 가능하다는 설명. 실행 절차: 9단계(시총 기준, 업종·지역 제외, 두 지표 계산, 순위 합산, 상위 20~30종목 선정, 분기별 분할매수, 연 1회 리밸런싱, 세금 고려 매도, 최소 5년 유지). 인도 연구 사례: 2021년 논문 기준 8년간 연 13.9% 대 SENSEX 9.3%; Amit Madha 백테스트 2002~2020년 연 35.4% 대 Nifty50 12.7%. 리스크·한계: 경기순환 섹터(금속·광업)의 이익 왜곡, 현금 보유 기업의 EV 계산 왜곡 가능성, 점수만 맹신하지 말고 사업모델·재무·지배구조 검토 필요. 과거 설명은 발표자 자신이 만든 공식 소개이며 특정 자산에 대한 가격 방향 예측은 없음.
다듬은 글
I first read about heuristics in Daniel kahneman's Thinking Fast and Slow these are basically mental shortcuts that just about everyone uses to deliver results in super quick time for example a question like how happy are you with your life right now subconsciously becomes a heuristic question like in what mood are you right now we also come up with analytical shortcuts like the rule of 72 which explains the time it will take to double once money for example if someone were to ask how many years will it take to double my money that is growing at six percent per annum then we can either take some time and give a super accurate answer or we can magically produce the somewhat accurate answer of 12 Years today's video is about applying the same heuristics and Magic to investing as we explore Joel greenblatt's magic formula framework I should be discussing five things in this video the concept of magic formula investing the nine steps one needs to implement some numbers on how the strategy has performed especially in India some drawbacks in the strategy that needs to be plugged or improved and finally I'll have a list of 20 to 30 Indian stocks that you can consider as part of your own magic formula portfolio let's begin magic formula investing is a Formula driven approach that focuses on buying good companies at favorable prices as you might have guessed by now the word magic is purely a marketing stunt but in numbers greenblatt's Magic portfolio does deliver and analyze return of 23.8 percent between 1998 and 2009 which is a lot higher than the 9.6 percent that the S P 500 managed in the same period the exact process and strategy can be found in his book the little book that beats the market and the strategy hinges on this uncomplicated objective of finding cheap and good companies let's start with the cheap part and as per Greenblatt a company's earnings yield showcases its cheapness from a valuation perspective so the earnings yield is quite simply the company's operating earnings as a percentage of its Enterprise Value the operating earnings can be easily found in the company's profit and loss statement and is generally listed as earnings before interest and taxes or ebit the Enterprise Value is not that clearly visible but it's a quick calculation that takes into account the company's market capitalization its debt and cash in other words this metric identifies the investors return on investment and as you might have expected higher the earnings yield the cheaper is the company the second part of Joel greenblatt's magic formula is the identification of good companies and for this he prefers using the return on Capital metric which is computed by taking the company's operating earnings or ebit and dividing it by a summation of its net fixed assets and networking Capital understand understandably higher the return on Capital the more efficiently is the company using its resources another way of explaining a high Roc is to look at it as a proxy to the quality of business and its operating model so companies which have a high Roc are generally companies that have a superior brand have a loyal customer base deliver excellent products and services companies that have a strong sustainable business model and have a wide economic mode so to put this together on one hand the magic formula uses the earnings yield which quantifies how cheaply valued the company is and on the other hand it's the return on Capital which explains the efficiency and quality of the business for example I've picked some numbers pertaining to Asian paints from the company's balance sheet and its profit and loss statement now the earnings yield is simply the ebit divided by the Enterprise Value that is the sum total of market capitalization and debt minus the company's cash and bank balance this gives us an earnings yield of 1.9 percent similarly The ROC of Asian paints is the ebit divided by the summation of its net fixed assets for which we can use the net block number and the net working capital which is simply the difference between current assets and current liabilities this gives us an Roc of 39.8 for Asian paints so the same process can be applied to any number of companies and if you're using a platform like screener or ticker tape then there is also this facility of creating a custom filter that can be very useful and can reduce your efforts okay now that we have these two metrics it's important to piece this together as a strategy and this is where Joel Greenblatt gives us a set of nine rules nine steps which forms the basis of the magic formula investing strategy the first rule pertains to market capitalization and Greenblatt prefers applying the formula to only those companies which have a market cap of at least 100 million dollars which means he has kept the really small cap companies outside the scope of the strategy so we'll probably do the same team and work with only those companies that are at a market cap of 5000 crores or more this keeps our universe to the top 500 companies within the Indian stock exchanges the second rule pertains to the exclusion of certain sectors more specifically Financial companies and utilities while it's not clear in the book why Mr Greenblatt excludes them but in my view is to do with the way both these sectors are financed which happens with large amounts of debt the third rule is around excluded geographies and the magic formula framework ignores foreign companies and American deposit receipts in its construct so in our case we'll show our loyalties and stick to Indian companies the fourth rule is to calculate the earnings yield of a universe of companies and we've already discussed how to do that and the fifth rule is where we plug in the return on Capital numbers for the calculations that we are done earlier all right so these five steps are the basic raw materials or as Professor Snape would say the Five magic portions of the magic formula investing process when I put this on a standard screener the 5000 crore market cap rule brings down the number of companies from 4000 plus to a little over 500 of them and deploying rules 2 and 3 gets my list down to a little under 400 companies 391 to be precise I should mention step two was done manually by me in an Excel sheet so if you have a better way then please mention in the comments below but for your benefit I have attached the master document with all the numbers in this video's description so feel free to play around with it okay now we come to step six which is where we allocate a rank to each of the companies on the base cases of their earnings yield and return on Capital to illustrate this point let's say we have a small Universe of 10 stocks now I've already computed the earnings yield and return on capital for these stocks so the next step will be to rank each company across these two parameters and then add these together for us to receive a total score for each company for example foxtrot is ranked number one as per its earnings yield and number two for its Roc adding 1 and 2 gives us a total score of three for this stock as you must have figured out by now companies that have a low total score like foxtrot India and Juliet in our example are better positioned in terms of cheapness and quality of business as a combination and in my opinion that's where this approach is not a straight road for instance look at Delta while it is a brilliantly run business which shows up in its number one rank for Roc it is also a very expensive stock to invest in which is evident in its earnings yield ranking of eight I think a situation like this is going to be very common when you look at your screener but as a combination the magic formula is expected to give a balance of sorts and so the final step is to sort this table on the basis of the total score which gives us our preferred list of companies starting from foxtrot to India to Juliet to Delta and so on all right now we have step 7 in the magic formula investing framework and as a follow-up to what we did in Step six we are now looking to invest in about 20 to 30 of the highest ranking companies so from our universe of 391 companies these 30 are the highest ranking companies from there again the worksheet I've attached in the video's description has more specifics but I'll be touching upon a bit more on these companies a little later in the video in fact in his book and interviews Mr Greenblatt suggests that investors should accumulate these stocks on a progressive basis that is instead of putting some money in each of the 20 30 stocks one should look to invest into four to five companies every quarter over a 12 month period This Way the investor can take advantage of low evaluations as the earnings yield continues to fluctuate on a daily basis presenting buying and selling opportunities from time to time the next step step 8 requires the investor to rebalance his or her portfolio once a year now because there is some taxation involved the ideal approach is a two-step process firstly sell the portfolios loser stocks in the 51st week of purchase so that a short-term capital loss can be booked and secondly sell the portfolios winners in the 53rd week from purchase which amounts to a long-term capital gain not only does it make things tax efficient but as a strategy the magic formula does require investors to book profits once a year and to use the proceeds into repeating the seven steps that we have learned early in the section in other words the magic formula is like growing a crop you select the seeds irrigate your stocks give it an ear to grow and at the end of the year you weed out the non-performing ones and sell the profitable ones before showing another set of stocks for the following year which brings me to the ninth and final step in the process and that is to persist with this magic formula approach for a period of at least five years to derive the maximum benefit of the strategy of course the big question on everyone's mind is does the magic formula really work so enjoy green plant back tested his magic formula between 1988 and 2004.
the results he received were truly remarkable in those 16 years the magic portfolio had just one down year and delivered a cagr of 30.8 percent at a time when the s p 500's early return was 12.4 percent studies all over the world in Brazil Hong Kong China Thailand the Nordic countries the United States of course have all supported the magic formula and its ability to deliver Superior results closer to home I came across a 2021 paper written by some research students of Sri Guru Gobind Singh College of Commerce where they simulated the magic formula on Indian stocks over an eight-year period the study revealed a couple of things one on a risk unadjusted basis the magic formula delivered better returns in 5 out of 8 years with a cagr of 13.9 percent as against the 9.3 percent that the BSC sensex delivered and secondly when the researcher just tested out different quantities of stocks they figured that a 30 stock portfolio offered better returns than a 10 Stock or a 50 stock portfolio somewhat highlighting the fine line between focus and broad-based diversification I found another article authored by Amit madha where he back tested the magic formula framework from the year 2002 until the year 2020.
as a process Mr madha simulated an equal weighted portfolio of 25 stocks that is a four percent allocation to every stock and ran the magic formula process over an 18-year period his results show that while the nifty 50 generated a return of 12.7 percent during this period his magic formula portfolio would have delivered an astounding 35.4 percent to put it differently a lack of rupees invested in 2002 would have grown to 2.33 crores by 2020.
the point is the magic formula does build a strong case for consideration in one's investing approach and it is my belief that if we use it with some of the learnings we have derived from other videos on my channel we can all build a powerful profitable and sustainable stock portfolio for the decades to come so how does one invest in this magic formula concept the first approach is DIY and we've already gone through the nine steps that one needs to do to arrive at that list of 20 to 30 stocks in fact let's have a quick glance at those companies from my list and the first thing you are likely to see are a lot of metal and mining companies this is the case now and I really want you to understand this because many of these companies have registered a high operating income or ebit in the last couple of years which has really pushed up their earnings yield and Roc scores in that context one has to be careful of cyclical sectors as I've explained in earlier videos as well and in such scenarios you can either use normalized earnings that is average earnings over the last five to six years or you can omit these companies all together another area I want you to be careful of and I'm using my learnings from that video on cash Rich companies is that many of the top rankers in the earnings yield column are likely to be companies that have a high cash balance and that's because the denominator of earnings yield Enterprise Value so EV excludes cash in its calculations which can lead to lopsided numbers I mean think of it this way say you come across a printing press business which has an advanced machine that is worth one crore rupees this business earns about 20 lakhs a year which by my definition comes to a return on investment of 20 but this business also has 80 lakhs of cash in its current account for whatever reason now since we are using Enterprise Value the EV will come to 100 minus 80 that is 20 lakhs which will take my 20 Roi number to 100 percent which in my view will be a misrepresentation so these are some nuances that one has to be careful of and it's the very reason why I would never blindly trust a magic formula screener and will always back it up with an analysis of its business model financial statements seasonality of the business promoters Integrity the company's growth Runway Etc so have a look at the worksheet that I've in the video's description and if you have any questions feel free to post them in the comments box below okay so this was DIY and hardcore DIY but if you don't want to get into any of this then a second option is to source and utilize a list of magic formula stocks that's available in websites like value research online screener dot in equitymaster.com ETC I have personally never used these services but I think some of these websites offer this list free of cost While others charge a fee for it so do check that out and also try to figure out how the list has performed on a historical basis a third option is to invest in a magic formula set of stocks via a platform like small case or wealth desk now I checked both these platforms and while I found nothing on small case I did find one magic formula option on wealth desk but when I logged on to small Keys what came as a surprise is that I had actually subscribed to a free small case titled magic formula way back in 2018 or 17 and thankfully I hadn't persisted with it because it doesn't seem to have done well at all anyways I hope someday I get to build a small case of my own using what we are learning in this channel but until that day arise in my opinion a strong dedicated research based DIY approach seems to be the best recourse for now so remember the magic investing strategy is a set of steps nine steps to be precise and the focus is on identifying cheap and good companies that is explained by the Learning field and return on Capital metric The Matrix formula essentially combines these two characteristics apply some filters on top of it and advises a yearly review of the companies that form a part of it in my opinion the magic formula is a powerful heuristic and a lot like the rule of 72 gives us a clear strategy to wealth creation in the stock markets and because it's just two variables I think the strategy is easy to understand easy to implement and easy to track which makes it a wonderful starting point for anyone who is still a bit confused on how to identify good stocks I sincerely hope you learned something new today and if yes then do tap on to the like button and share this video with your friends thank you for your time and I look forward to catching up with you next week on another insightful video until then
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