According to @QCompounding, Joel Greenblatt averaged about 40% annual returns for over 20 years and shared the method in The Little Book That Still Beats the Market. Source: @QCompounding on X, Nov 17, 2025. The Magic Formula ranks stocks by earnings yield (EBIT divided by enterprise value) and return on capital (EBIT divided by net working capital plus net fixed assets), then buys a basket of the highest combined ranks. Source: Joel Greenblatt, The Little Book That Still Beats the Market, revised edition 2010. Implementation in the book calls for buying 20 to 30 stocks spaced across 12 months, holding roughly one year for tax efficiency, equal-weighting positions, and rebalancing annually as ranks change. Source: Joel Greenblatt, 2010. The universe excludes financials and utilities due to accounting differences, applies a minimum market cap to avoid very small illiquid names, uses pre-tax EBIT, and computes enterprise value including debt and cash. Source: Joel Greenblatt, 2010. Greenblatt emphasizes that multi-year underperformance streaks are normal and that strict discipline in following the rules is required to realize the strategy’s edge. Source: Joel Greenblatt, 2010. For crypto market participants, this is an equity strategy and does not directly apply to crypto assets such as BTC or ETH, though it can be used to evaluate publicly listed crypto-related companies that report standard financials. Source: Joel Greenblatt, 2010. Actionable takeaway: build a screener that ranks by percentile of EBIT/EV and return on capital, selects the top 20 to 30 names, staggers entries monthly, and rebalances annually while accounting for slippage and taxes. Source: Joel Greenblatt, 2010.