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Let the magic formula work its magic over time from "summary" of The Little Book That Beats the Market by Joel Greenblatt
The magic formula is a simple, yet powerful concept that can help investors achieve above-average returns in the stock market. By focusing on two key factors – earnings yield and return on capital – the magic formula identifies companies that are both cheap and good. This combination of value and quality is the key to outperforming the market over the long term. When investors apply the magic formula consistently and patiently, they allow the power of compounding to work in their favor. Over time, the magic formula can help turn a small initial investment into a substantial sum. By letting the magic formula work its magic over time, investors can benefit from the power of time and patience in the stock market. It is important for investors to trust in the magic formula and resist the temptation to deviate from its principles. While the magic formula may not always perform well in the short term, its track record over the long term is impressive. By staying disciplined and sticking to the magic formula, investors can increase their chances of success in the stock market. The magic formula is not a get-rich-quick scheme, but rather a systematic approach to investing that requires patience and discipline. By following the magic formula consistently over time, investors can increase their chances of outperforming the market and achieving their financial goals. Trust in the magic formula and let it work its magic over time.
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