Joel Greenblatt, founder of Gotham Capital and one of the most successful value investors of his generation, presents what he calls the "Magic Formula" — a systematic method for selecting stocks that combines two simple metrics to identify good companies available at bargain prices. The two metrics are return on invested capital (ROIC), which measures how efficiently a company generates profits from its assets, and earnings yield (the inverse of the price-to-earnings ratio), which measures how cheaply the stock is priced relative to its earnings. Greenblatt demonstrates with historical data that mechanically buying a diversified portfolio of high-scoring stocks using this formula has historically outperformed the market significantly over long periods, without requiring any subjective judgment or security selection skill. The book is written deliberately for the layperson — Greenblatt uses clear language and simple examples, having originally tested the material on his children — and makes no pretense of comprehensiveness. Its value lies not so much in the specific formula as in the clear, compelling illustration of why combining quality and value criteria systematically can generate superior long-term returns, and why individual investors who abandon such a system during periods of underperformance typically destroy any advantage the approach might have offered.