The correct expression of Borg's formula is the long-term return rate of the stock market = return on investment + return on speculation = (dividend rate at the time of initial investment + earnings growth rate during the investment period) + change rate of the price-to-earnings ratio during the investment period.

The Borg formula was proposed by John Borg.

John Bogle is the inventor of the world's first index fund and is known as the "Father of Index Funds."

The Borg formula analyzes several factors that affect the returns of index funds. Relying on the Borg formula, we can invest in varieties with rapid growth in profits, or in varieties with cyclical changes in profits.

There are two variables in Borg's formula: The first variable is the dividend rate.

Obtaining this data is very easy, because the dividend rate at the time of initial investment is determined when we buy the index fund.

Generally speaking, the more undervalued an index fund is, that is, when its price is lower than its intrinsic value, the higher the dividend yield.

The value of the dividend rate is also provided in the author's official account.

So this variable is the easiest to obtain.

The second variable is the P/E ratio.

The P/E ratio at the time of purchase is determined at the time of purchase, just like the dividend rate at the time of purchase.

But we cannot predict how the P/E ratio will change in the future.

However, we can look for experience through patterns.

There is a pattern in changes in the P/E ratio, that is, in the long run, the P/E ratio will change cyclically within a range.