The Road to Riches...episode 1

Given that this is the first post, I figure I should give you some details on what this blog is all about. But first, some background. About a year ago, I read Joel Greenblatt's "The Little Book that Beats the Market." In it he details how his investment strategy has returned on average about 30% per year for the past 17 years. As a long-time individual investor getting closer to 10% a year, I was very intrigued at the prospect of getting those results for myself. Greenblatt's "Magic Formula" is fairly simple - he looks at the largest 3500 companies across all US exchanges and then force ranks them based on their Return On Capital. Then he re-ranks them based on Earnings Yield. To get their overall ranking, he adds their place on each list and ranks them again. The lower the number, the better the theoretical investment that stock is. So, that brings me back to what this blog is all about. I plan to track my investment performance based on the Magic Formula and compare it to market averages over the same time frame. Going forward, my posts will be on updates of my portfolio returns and discussions on stocks that fit the Magic Formula profile.