Review :

This is a fantastic read. It's short and succinct. I like that Joel uses humorous writing to make something accounting less boring.

In a net shell, he is promoting a strategy he calls "Magic Formula Investing". Building on the time-tested strategies of Ben Graham and Warren Buffet, Joel tells us to invest in companies that return very high return on capital AND high profit per share.

He also sets the right expectations, by providing enough data to prove that it works (mostly), and that it works if you have patience. He also wants us to know that investing in individual stocks is not for everyone (surprise. Graham and Buffett have said the same).

After some digging, I found that Joel has his own mutual fund with holdings chosen using the Magic Formula:

The fund has returns 18%+ over 3-year period, beating the market.


1. Return on Capital = EBIT / (Net working capital + net fixed asset)
2. Earning yield = EBIT / Enterprise Value

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