The Acquirers Podcast

Formula Investing: Schwartz and Hanauer compare the Magic Formula and Acquirer’s Multiple | S07 E17

13 snips
May 28, 2025
Marcel Schwartz, a researcher from the Technical University in Munich, and Matthias Hanauer, a quant researcher at Rubico, discuss their collaborative work on formula investing strategies. They explore the effectiveness of various financial formulas, including the Piotroski F-score, in enhancing investment performance. The conversation highlights trends in market dynamics, the longevity of quality investing over value investing, and the surprising implications of passive investment on stock valuations. Prepare for insights that blend academia with practical investing wisdom!
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INSIGHT

Formulas Outperform Market Historically

  • Four popular investing formulas consistently outperformed the market over an extended period.
  • These formulas also showed significant return spreads not explained by traditional models like CAPM.
INSIGHT

Factor Exposure Drives Returns

  • The positive returns of these investing formulas mainly stem from exposure to established factors like momentum, value, and size.
  • No investment magic is present; it's about factor exposure.
ADVICE

Continuously Innovate Investment Formulas

  • Simple formulas require ongoing innovation and adjustment; no single magic formula lasts forever.
  • Adapt strategies to evolving market conditions and data for sustained outperformance.
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