formula plan

Formula Plan

An investment strategy that calls for the buying and selling of securities according to a set formula. Both long-term and short-term formula plans exist, as well as high- and low-risk plans, but most rely heavily on previous market indicators. For this reason it is difficult to include a new issue of stock in a formula plan. Formula plans aim to eliminate personal opinions, emotions, and judgments from investing by never deviating from the formula.

formula plan

The buying and/or selling of securities according to a predetermined formula. This approach to investment decisions is intended to eliminate the investor's emotions and instead to follow a mechanical set of rules. A huge number of formula plans have been developed over the years.
References in periodicals archive ?
For example in the illustration used above for cross-testing, if the employee group had a fixed formula plan, the percentage of compensation allocated each year to plan accounts would be much greater for employee A, age 55, than for employees C and D, both age 25.
Physicians Formula plans to apply to list its common stock on the Nasdaq Global Select Market under the symbol PHYS.
Automatic, Additional Grants Under Formula Plans. Some plans contain formulas whereby an additional amount of stock options or stock appreciation rights (SARs) available under a shareholder-approved incentive plan automatically increase in every year by a percentage of total stock outstanding at the beginning of the year where there is an increase in the number of outstanding shares of the corporation over a predetermined base-year amount of outstanding stock.