This article is an online adaptation of our weekly NO-COST Top Ideas Newsletter sent on 25.07.2023. Register here to receive it in your email every Tuesday.

Is the Magic Formula's effectiveness still valid moving forward? Do I require an additional indicator to invigorate its performance or enhance returns? – a subscriber inquired.

Two excellent inquiries!

No one can accurately predict this

The truth is NO ONE, and I emphasize NO ONE can forecast which strategy will yield the best results.

It's a reality seldom disclosed, particularly by any party promoting the “finest” strategy (let's liken it to a glittering gem) that is guaranteed to outperform. A LOT!

All their prose and graphs substantiate this, indeed. Yet, as convincing as it may seem, they are also uncertain.

Disregard the glittering gem

This might seem disheartening, but it's not.

It signifies all you need to do is:

• Disregard the glittering gem
• Discover a strategy that resonates with you and exhibits a remarkable track record – Examples here: Superb strategies we have explored
• Implement it methodically
• Stay composed and adhere to your strategy

Revisiting the Magic Formula

Returning to the Magic Formula. Is it a commendable strategy? We believe so.

The book was so compelling that it persuaded me to transition to a more quantitative investor. We conducted extensive research on it and compiled an article featuring all the back tests we could uncover. You can peruse it here: All the back tests on the Magic Formula.

In another examination, we discovered that integrating a single ratio elevated the yield of the magic formula by +600.5% over 12 years. 

Is it the “superlative” strategy?

Therefore, is the Magic Formula the “supreme” strategy at your disposal?

It might be, we simply don't have certainty. I favor the investment strategy we advocate in the newsletter, yet we cannot firmly ascertain which strategy will reign supreme.

Both are positioned to thrive. Because they are established on prudent investment concepts that have been diligently scrutinized.

 Here is an article that can assist you if you are yet to discover your investment strategy. How to discover your optimum investment strategy – not the one you envisage.

Minimize your losses

To maintain fidelity to your strategy, it is imperative to minimize your losses. This is why we recommend employing a trailing stop loss. You can access all our findings on this matter here: Realities about stop-losses that nobody wishes to acknowledge.

For precise directions on how to implement this, refer to the conclusion of the article

Annotations and Warnings incorporated in the screener

A succinct note for screecher subscribers.

You now have the capacity to compose and save annotations for all the 22,000 companies in the screener.

To append an annotation, select the company name and mobilize the text field – observe the illustration below

For instance, here is my annotation on Apple Inc.:

Example of screener company note

Incorporate an alert for 110 indicators

You are now able to establish email alerts for all 110 indicators and ratios within the screener.

For instance, these are the price alert alternatives for Apple Inc.:

Screener price alert options

If an alert is activated, you will receive an email that encompasses your annotations. This serves as a valuable prompt concerning the rationale for setting the alert and your assessments of the company.

Your analyst, guiding you to discover your optimal strategy

PS Does the screener seem like a tool that can aid you  – now featuring annotations and alerts! To sign up now, click here.

PPS It's all too easy to forget, so why not sign up now before you become sidetracked?