According to @QCompounding, Joel Greenblatt’s Magic Formula is a simple, disciplined way to find good companies at great prices by targeting high return on capital and high earnings yield for portfolio selection; this aligns with the book’s framework for systematically ranking and buying quality value stocks. Source: @QCompounding. The book defines return on capital as EBIT divided by tangible capital and earnings yield as EBIT divided by enterprise value, ranks stocks on both metrics, buys a basket of roughly 20–30 top-ranked names, and rebalances about annually to maintain exposure to high-quality, attractively priced stocks. Source: Joel Greenblatt, The Little Book That Still Beats the Market (2010 revised edition). Greenblatt’s implementation uses clear screening rules with basic liquidity and market-cap filters and excludes sectors with atypical accounting (e.g., many financials and utilities), making the approach executable as a periodic rebalance across a defined equity universe. Source: Joel Greenblatt, The Little Book That Still Beats the Market (2010 revised edition); MagicFormulaInvesting.com.