The Everest Formula
how it works
The Everest Formula is a quantitative value investing algorithm that seeks out good businesses when they are available at bargain prices.
The algorithm is linked to an investing strategy (The Everest Strategy) that periodically rotates the best stocks computed by the formula.
Backtest results showed that the Everest Strategy had been a winning strategy over the last 20+ years, returning an astounding 30%+ of average annual returns, even when value stocks underperformed growth stocks. See the results
Formula overview
The Selection Process
The algorithm goes through 4 different steps to extract the best companies to invest in:
01
Precision filter
The first step consists in removing all the stocks that might have misleading or inaccurate data for a quantitative strategy, minimizing investing mistakes.
02
Quality filter
The formula aims to find companies with a solid return on investments made and a good management team. Consequently, this filter selects only the stocks that meet these criteria, valued with various quality metrics.
03
Valuation Filter
The second purpose of the formula is to find businesses that can be purchased at a reasonable price. Therefore, this filter selects only the stocks which respect our meticulous valuation criteria.
04
Valuation Rank
Finally, the remaining stocks are ranked based on our most crucial valuation metric. The first-ranked stocks will give you the best results!
Steps insights
1. Precision Filter
2. Quality Filter
3. Valuation Filter
4. Valuation Rank
1. Precision Filter
2. Quality Filter
3. Valuation Filter
4. Valuation Rank
How to apply the strategy
Step 1
Choose the number of stocks to have in your Portfolio
Choose how many stocks you want in your portfolio.
More stocks offer less volatility, whereas fewer stocks offer more returns.
The strategy backtest suggests keeping this number from a minimum of 3 to a maximum of 10.
Step 2
Buy the Stocks on your favorite broker
Check on the Everest Screener the first n stocks to buy, with n as the number you have chosen in step 1.
Purchase them with your broker by equally dividing your portfolio among the selected number of stocks.
Step 3
Weekly update your Portfolio
Once a week, check (from the screener or the newsletter) that the stocks in your portfolio are still ranked on top.
If not, sell those exiting and buy the stocks that replaced them, rebalancing all the stocks to be equally weighted.
Need more explanations? Consult the Faq
BACKTESTS FROM 1999
The Results
Cumulative Growth
Returns Year-Over-Year
Returns Per Period
Backtest Details
Cumulative Growth
Returns Year-Over-Year
Returns Per Period
Backtest Details
