You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits

You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits | Joel Greenblatt | A welcome departure from most value investing books

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You Can Be a Stock...

	You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits Joel Greenblatt Fireside, 1999 - 304 pages average customer review:based on 48 reviews view larger image
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highly recommended

Up there with Margin of Safety as one of the top investment books ever written.

This book is up there with Seth Klarman's Margin of Safety as one of the best investment books ever written, and for less than 20 dollars is a great bargain. Greenblatt focuses on special situations including spin-offs, mergers, bankruptcies, restructurings, rights offerings, risk arbitrage, merger securities, and recapitalizations. He discusses these strategies, what has worked for him, and what hasn't. A better title for this book is needed, however, and I would call it Event Driven Special Situations.

A welcome departure from most value investing books

I will not occupy space with a critique of the title; I'm ashamed to admit it kept me from taking this book seriously as a potential purchase for a long time. That said, I cannot more highly recommend this book, especially to those with a smattering of understanding of financial statement analysis and finance. It is truly different from most value investing books one might find.

This book contributes unique insights and real-life examples of how to apply his methods for valuing spin-offs and other special situations within which he invests. This book was so packed with revelations that it was my understanding that it got passed around extensively in the hedge-fund community. That is a weighty endorsement.

Further contributing to the quality of this book is its approachability to readers from most any walk of life. While a novice may not gather every concept related in this book, they still should be able to comprehend a great deal more from this book than by many penned by academics.

In summation, this book easily qualifies in my top 5 of most influential investing books, and is one I typically recommend to anyone interested in improving their investment perspective.

I would also highly recommend Greenwald's "Value Investing..." and Greenblatt's other book, "The Little Book that Beats the Market." Both would be worthy complements to this book, though I would recommend reading the latter first and the former last when reading the three texts.

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A great read

The ONLY reason I read this book was that it was recommended by some trusted sources - as others have noticed, the title is horrendous and highlighted when coupled with the gaudy yellow cover. In particular, the title makes me think of late night informercials promising easy rewards in real estate with no money down. Fortunately, the content of the book more than makes up for the title.

Greenblatt's methods ultimately stem from the "intrinsic value" and "margin of safety" ideas developed by Benjamen Graham (see "Security Analysis" and "the Intelligent Investor"). However, in somewhat of a nod to adherents of the efficient market theory, Greenblatt focuses his energies on areas that are subject to less scrutiny, and hence, less likely to be efficiently priced by the stock market. He notes, for example, that many institutional investors are prohibited from owning certain kinds of securities (e.g., a stock index fund can't own bonds), and that investors that receive securities in some transactions may not desire to hold them. By researching companies that are involved in "special situations," Greenblatt theorizes that investors can uncover stocks that are worth more than their current market value. To this end, the book covers opportunities with spin-offs, bankruptcies, restructurings, rights offerings, re-capitalizations, merger securities and companies going private.

Although Greenblatt is clearly an intellectual heir to Benjamin Graham, one of the great things about this book is that is provides a theory, albeit a time-consuming one, whereby investors can uncover their own opportunities. IMHO, formulaic investing is unlikely to work over the long-haul, because a sucessful formula that is too simple to replicate will tend to draw competition. Rather than relying on formulas, Greenblatt tells readers how to identify situations that MAY present opportunities. It is up to the individual investor to research those potential opportunities and determine whether they are worth pursuing.

Although Greenblatt is a solid writer and the book is highly entertaining, I believe most readers would benefit from an understanding of value investing principles before trying to read this book. It might be a good idea to read Graham's "Intelligent Investor" at the very least (although this is a much tougher read than Greenblatt's book, and Graham's approach is not entirely compatible with Greenblatt's). Moreover, Greenblatt assumes that readers have a working familiarity of financial statements.

One last point of note - some of the ideas that Greenblatt sets forth are somewhat similar to those propounded by Marty Whitman in "the Aggressive Convervative Investor" and in "Value Investing - a Balanced Approach" (Greenblatt mentions Whitman's Third Avenue Value Fund as a possible source of investment ideas in the book). Both of these are good reads, particularly along with Greenblatt's book. Another good book to read is Dreman's "Contrarian Investing."

In all, this book is a great read, and I'd highly recommend it, but I would not recommend it for beginners.

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I was embarassed

My dad is sort of an intellectual type, and looking at my bookcase during a recent visit, he scoffed when he saw this title. Later, before he left, he asked me what I was reading. When I told him, he said, "what about those get rich quick in the stock market books?" I was embarrassed. Damn you, Joel Greenblatt!

Seriously, though, this is a great read. I've read an extremely wide selection of investment books in the last year or so, and this is the ONLY one that touches on some pretty important concepts, like

Stub Stocks to avoid LBOs
LEAPS strategy to simulate stub stocks (basically, just buying calls...not that revolutionary)
Merger securities
spinoffs
and the best discussion of LBO operations that I've ever read.

I would strongly recommend you buy this book, if you consider yourself an intermediate-or-better investor. I haven't made any money from it yet, but I'm scanning for opportunities even as we speak, and I bet I will find some soon-- thanks entirely to this book.

Cheers!

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useful information and enjoyable writing

This book discusses about special situation investment. The author presents the subjects with a very accessible (humorous) writing style that I like it.

Usefully, the author explains different topics with case studies. I learned from those examples.

Even though, I don't think I would be able to utilize ideas in this book in near future. And, the special situation investment is not suitable for everyone. Just like there is no one life style is suitable for everyone. However, just by understanding this investment approach can broaden my view on investment.

Conclusion: my time and money are well spend on this book.

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