130 Performance of Magic Formula investing

Performance of Magic Formula investing	Magic Formula 投资法的回酬
Background	背景
I started my own stock investment journey about two years ago (2015). I used technical analysis in the beginning. After a year of trying, I find my result to be very terrible. Seeing my capital to reduce in size, in one time, caused me to suspect myself not cut to stock investment. Honestly, I thought of giving up DIY active investing.	我在两年前（2015）开始股票投资。刚开始时我使用技术分析。尝试了一年之后，发觉成绩惨不忍睹。看着资金缩水，让我不禁怀疑自己是否无缘投资股票。老实说，也有想过放弃自己投资。
All through the time, I have been reading blog posts in i3investor. One of the blogger, kcchongnz, has been writing actively in i3investor propagating Fundamental Value Investing. And all along, I followed his posts--but not his method (shame on me).	在那一段时间里我都有阅读i3investor里的博客贴文的习惯。其中一位活跃的博客，kcchongnz，一直鼓吹基本面价值投资法。我也一直有追踪它的贴文，惭愧的是却没有追随他的投资法。
Out of desperation, I began to re-read his posts. I found that over his three~four years of investing using fundamental value investing, he has successfully earn exceptionally returns. And I thought to myself, if only I had simply followed his method, I would be in a much better shape. It took me a while to read his posts, and to get to appreciate the Magic Formula investing he is using.	在一片茫然的情况下，我开始重读他的贴文。我发觉在过去三、四年里，基本面价值投资法让他赚取可观的回酬。我想，若是当年我就傻傻的跟着他的投资法，我就会有不错的成绩。我花了一段时间阅读他的贴文，并开始明白他所使用的Magic Formula投资法。
After a year of trying Magic Formula, I would say I am happy with the result. The most fantastic of all is I do not have to worry about daily price movements. Because I already know their financial positions.	在尝试了Magic Formula一年后，我很满意自己的成绩单。最可喜的是我再也不因每天的价位波动而烦恼。因为事先了解公司的财务状况。
Magic Formula Investing	Magic Formula 投资法
Magic formula investing is an investment technique outlined by Joel Greenblatt (JG) that uses the principles of value investing. JG published his method in his 2004 book The Little Book That Beats the Market, and later update in 2010 in The Little Book That Still Beats The Market. (Those in Johor Bahru may borrow the 2010 version from Sutera Mall Library.)	Magic Formula 投资法是Joel Greenblatt （JG）所倡议的价值投资法。JG把他的方法写在他的两本著作里，即2004年版的The Little Book That Beats the Market，以及2010年版修订的The Little Book That Still Beats The Market。（新山的朋友可以在五福城的图书馆里借到2010版。）
JG wrote the books for their children, to teach them a simple way of finding cheap and good stocks that produces excellent returns. JG also publish the returns in the books, which we shall see later. The books are rather easy to read, and most importantly, the method easy to follow.	那两本书是JG写给他的孩子们的，目的是要教导他们一个简单的方法，以便可以筛选到便宜又好的股票，从而可以提供高回酬。两本书都很容易阅读，重要的是方法容易使用。
In the pursuit of finding cheap and good stocks, value investors used many valuation methods. The most common is PE ratio and ROE. JG uses two other criteria: Company's earnings yield (EBIT / enterprise value) Company's return on capital (EBIT / (net fixed assets + working capital)).	在找寻便宜又好的股票时，价值型投资者使用许多种评估法。一般常用的是PE和ROE。JG使用另外两个方法。 公司的 earnings yield (EBIT / enterprise value) 公司的 return on capital (EBIT / (net fixed assets + working capital))
Performance of Magic Formula Investing (by JG)	Magic Formula 投资法的表现 （根据JG的资料）
For performance provided in the books, I use the data copied from oldschoolvalue.com. Over the 22 years period, the CAGR is 23.76% -- which means turning $10,000 into $1.1 mil. In most of the years, Magic Formula gives a higher returns than benchmark S&P 500.	书里所展示的回酬表现，我从oldschoolvalue的网站截取。在过往的22年里，复利回酬是23.76%，亦即把一万元的资本滚成一百一十万元。在多数的年份里，Magic Formula也获取比市场指标S&P 500更高的回酬。
Performance of Magic Formula Investing (in Malaysia)	Magic Formula的回酬（马来西亚）
I believe there are follower of the same strategy in Malaysia. Unfortunately, there is no systematic data gathering / analysis being done. I can only find one practitioner who shared his experience and results in i3investor -- kcchongnz. kcchongnz has two portfolios in i3investor, the first is created in 2013 and the second in 2016. Let's see the result with the longer investment time. Over the last five years, the portfolio returns a CAGR of 20.4%. KLCI index made a total gain of 19.9% (or a CAGR of 3.7%).	我相信马来西亚也有人使用这个投资法。问题是没有人或者学者去做系统性的资料收集。我也只能找到kcchongnz，一位在i3investor分享他的经验和成绩单的投资者。kcchongnz总共设立了两个组合，第一在2013年而第二个是在1026年。让我们来看看历史悠久的那个组合。在过去五年里，组合给出了20.4%的复利回酬。反观综合指数只给出了19.9%的总回酬（即3.7%的复利回酬）。
Conclusion	结论
We can see Magic Formula works in Malaysia market as well. I think Tobias Carlisle (if I am not wrong) also studied and found it works in Europe and Japan.	我们看到Magic Formula在马来西亚的市场也是行得通的。如果我没有记错的话，Tobias Carlisle也曾研究过、也发觉Magic Formula在欧洲和日本也行得通。
I will be very happy to achieve a long-term returns of 10%-15%. If I had followed kcchongnz model portfolio, I would have beat my target returns. Well, all is not lost. I started a year ago, practicing and learning, I will, as I progress. So, those are the performance record of Magic Formula investing I can find.	对我而言，若是我能达到10%-15%的长期回酬，我就很满意了。还好，亡羊补牢，未为晚也。我才起步一年多，我可以边学边进步。这就是我所能找到关于Magic Formula投资法的回酬记录。
Postscript	后记
oldschoolvalue has improved Magic Formula into its QVG method. Tobias Carlisle also imrpoved Magic Formula into Quantitative Value method. As I am a bit lazy to modify my spreadsheet, and there is no screener that can screen using QVG or QV method, I will skip them for now.	oldschoolvalue 改良了 Magic Formula 成为 QVG 投资法。Tobias Carlisle 也改良了Magic Formula 成 Quantitative Value 投资法。但因为懒惰修改我的试算表再加上暂时也无screener可以根据 QVG 和 QV 两种方法筛选股票，所以暂时搁下。