Mathematical formulas to explain investing
There's a lot more to investing than numbers, but the underlying investment principles can be translated into formulas.

Giverny carried out this excercise and translated 4 core investing principles into mathematical formulas.

1. CONVERGENCE BETWEEN INTRINSIC VALUE (Vi) AND MARKET VALUE (Vm)

As "n" years go buy, the market value of the companies you own should approach their intrinsic value, without exception: "n" is unknown, though.

1. EQUATION OF WEALTH INCREASE

The increase in stock market wealth (W) is the sum of the aggregate Patience (P) over a time variable (y): Wealth is built by patient investors. Trying to make money fast can end up making you lose it faster.

1. RISK DECREMENT MEASUREMENT EQUATION

Risk decrement (D) is proportional to:

a. The level of profit margins
b. The level of debt Higher "a", lower "b" and stronger "c" should do the trick.

1. EQUATION FOR THE NORMALIZATION OF PARAMETERS INFLUENCING RETURNS

Stock market returns (Rs) eventually follow a normalized curve proportional to the rationality of an investor and inversely proportional to their crowd following instinct: You must be rational & think differently.