According to @QCompounding, a list of 10 stocks with return on capital above 20 percent was highlighted alongside a Charlie Munger quote underscoring that sustained high returns on capital can drive exceptional long term results; source: @QCompounding on X, Dec 5, 2025. Return on capital and return on invested capital are core quality metrics traders use to screen durable compounders and have been linked to superior long term equity performance and profitability persistence; source: Joel Greenblatt, The Little Book That Beats the Market, 2010; Asness, Frazzini, Pedersen, Quality Minus Junk, 2013, SSRN 2312432. For crypto, shifts toward risk on equity positioning and quality leadership have coincided with stronger correlations between Bitcoin and the S and P 500 in 2020 to 2022, affecting near term beta for BTC and ETH; source: IMF Blog, Crypto Prices Move More in Sync With Stocks, Adrian, Iyer, Queralto, January 2022. Trading takeaway: monitor the high ROIC names flagged by @QCompounding and pair a quality factor screen with real time BTC and ETH equity correlation tracking to calibrate exposure; source: @QCompounding on X, Dec 5, 2025; IMF Blog, January 2022.

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.

According to @QCompounding, Joel Greenblatt averaged 40% annual returns for over 20 years and attributes the performance to his rules-based Magic Formula detailed in The Little Book That Still Beats the Market (source: @QCompounding on X, Oct 4, 2025; source: Joel Greenblatt, The Little Book That Still Beats the Market). The strategy ranks equities by high earnings yield (EBIT/Enterprise Value) and high return on capital (EBIT divided by net working capital plus net fixed assets), buys roughly 20–30 top-ranked stocks with annual rebalancing while avoiding most financials/utilities and very small caps, and is designed for stock selection rather than crypto assets, implying no direct BTC or ETH impact from this post (source: Joel Greenblatt, The Little Book That Still Beats the Market; source: @QCompounding on X, Oct 4, 2025).

According to @mjmauboussin, the Magic Formula investing strategy focuses on selecting stocks with high Return on Capital and strong Earnings Yield, providing a systematic approach to identify quality and undervalued companies. Traders can apply this by ranking all companies on these metrics, buying the top 20–30, and rebalancing annually. This quantitative method is increasingly relevant to crypto traders seeking diversified exposure or adapting similar ranking models to digital assets, which may enhance portfolio performance in volatile markets (source: @mjmauboussin, Magic Formula Investing).