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You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits
A comprehensive and practical guide to the stock market from a successful fund manager—filled with case studies, important background information, and all the tools you’ll need to become a stock market genius.
Fund manager Joel Greenblatt has been beating the Dow (with returns of 50 percent a year) for more than a decade. And now, in this highly accessible guide, he’s going to show you how to do it, too. You’re about to discover investment opportunities that portfolio managers, business-school professors, and top investment experts regularly miss—uncharted areas where the individual investor has a huge advantage over the Wall Street wizards. Here is your personal treasure map to special situations in which big profits are possible,
-Spin-offs
-Restructurings
-Merger Securities
-Rights Offerings
-Recapitalizations
-Bankruptcies
-Risk Arbitrage
Prepared with the tools from this guide, it won’t be long until you’re a stock market genius!
Fund manager Joel Greenblatt has been beating the Dow (with returns of 50 percent a year) for more than a decade. And now, in this highly accessible guide, he’s going to show you how to do it, too. You’re about to discover investment opportunities that portfolio managers, business-school professors, and top investment experts regularly miss—uncharted areas where the individual investor has a huge advantage over the Wall Street wizards. Here is your personal treasure map to special situations in which big profits are possible,
-Spin-offs
-Restructurings
-Merger Securities
-Rights Offerings
-Recapitalizations
-Bankruptcies
-Risk Arbitrage
Prepared with the tools from this guide, it won’t be long until you’re a stock market genius!
285 pages, Paperback
First published March 1, 1997
About the author
Joel Greenblatt
27 books429 followersJoel Greenblatt is an American hedge fund manager and founder of Gotham Capital. He is also an academic and a writer. He is also an adjunct professor at the Columbia University Graduate School of Business. He is the former chairman of the board of Alliant Techsystems and founder of the New York Securities Auction Corporation.
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Displaying 1 - 30 of 313 reviews
September 3, 2010
I read this book because, according to "The Big Short" by Michael Lewis, some of the clever people who foresaw and profited from the financial collapse used this book as a how-to reference guide to investing. I just finished reading it, and haven't tried any of the techniques, but they all seem to make sense.
Starting from a Benjamin Graham/Warren Buffet value-investing view that recommends investing in stocks that are undervalued by the market, author Joel Greenblatt recommends certain situations where an undervaluation is most likely to be found - spinoffs, any financial instrument other than common stock that is given as consideration in a merger, post-bankruptcy common stock of good companies, restructurings, recapitalizations, and call options. Greenblatt, towards the end of the book, lists other books that give good investment advice, books that teach you how to read a financial statement, and which publications to review for financial news and investment ideas.
All in all, a good read. Now I'm going to see if any of the advice works.
Starting from a Benjamin Graham/Warren Buffet value-investing view that recommends investing in stocks that are undervalued by the market, author Joel Greenblatt recommends certain situations where an undervaluation is most likely to be found - spinoffs, any financial instrument other than common stock that is given as consideration in a merger, post-bankruptcy common stock of good companies, restructurings, recapitalizations, and call options. Greenblatt, towards the end of the book, lists other books that give good investment advice, books that teach you how to read a financial statement, and which publications to review for financial news and investment ideas.
All in all, a good read. Now I'm going to see if any of the advice works.
July 22, 2017
Unfortunately dated. It probably gave some great "secret" advice when first released but now hedge funds and mutual funds have been designed around his ideas. He describes opportunities mostly in special opportunities including:
1) spinoffs, 2) arbitrage, 3) bankruptcy and restructuring, 4) recapitalizations.
Maybe once this stock market cycle has run its course, the book will be relevant again.
1) spinoffs, 2) arbitrage, 3) bankruptcy and restructuring, 4) recapitalizations.
Maybe once this stock market cycle has run its course, the book will be relevant again.
January 7, 2015
So glad that I am a stock market genius now. :D
I started reading it because it was mentioned a couple of times in 'The Big Short' by Michael Lewis and most of the people who emerged winners in the 2008 downturn had vowed by this book.
The book highlights the special situations where value waiting to be unraveled. The author does a great job of describing all the situations in great detail. Though this is supposed to be a beginner's book, it would make a wonderful read for anybody who is interested in markets.
The best part of this book are the case studies that illustrate everything that the author has to say. Also, where the author suggests working on the financials yourselves and says, 'You must be paid for your hard work and not only for the risk that you take.' The humour sprinkled around in the book is quite enjoyable (esp. the bit about Pythagoras theorem).
Sadly, one doubts whether in the Indian context, the filings/proforma statements make as much sense, are as reliable and reveal as many details as they do in US. Still, I'd be on the hunt for some of the special situations mentioned here.
I started reading it because it was mentioned a couple of times in 'The Big Short' by Michael Lewis and most of the people who emerged winners in the 2008 downturn had vowed by this book.
The book highlights the special situations where value waiting to be unraveled. The author does a great job of describing all the situations in great detail. Though this is supposed to be a beginner's book, it would make a wonderful read for anybody who is interested in markets.
The best part of this book are the case studies that illustrate everything that the author has to say. Also, where the author suggests working on the financials yourselves and says, 'You must be paid for your hard work and not only for the risk that you take.' The humour sprinkled around in the book is quite enjoyable (esp. the bit about Pythagoras theorem).
Sadly, one doubts whether in the Indian context, the filings/proforma statements make as much sense, are as reliable and reveal as many details as they do in US. Still, I'd be on the hunt for some of the special situations mentioned here.
January 1, 2018
I love Joel's writings. They're simple, well explained, funny, relevant, and very well thought out. This book is a bible for dealing with special situations. I have not seen anything that comes even close to making so much sense and offering this amount of opportunity for vicarious learning in the area.
March 9, 2018
کتاب چیزی برای خواننده ی ایرانی نداره و فقط کیس های خاص وال استریت رو بیان کرده
کتاب هایی که گرین بلات معرفی کرده برای آشنایی با سرمایه گذاری رو در زیر میارم
David Dremen, Contrarian Investment Strategies: The Next Generation (New York: Simon & Schuster, 1988).
Benjamin Graham, The Intelligent Investor: A Book of Practical Counsel (New York: HarperCollins, 1986).
Robert Hagstrom, The Warren Buffett Way: Investment Strategies of the World’s Greatest Investor (New York: Wiley, 1994).
Robert Haugen, The New Finance: The Case Against Effective Markets (New York: Prentice Hall, 1995).
Seth A. Klarman, Margin of Safety (New York: Harper Business, 1991).
Peter Lynch and John Rothchild, One Up on Wall Street (New York: Simon & Schuster, 1993) and Beating the Street (New York: Simon & Schuster, 1994).
Andrew Tobias, The Only Investment Guide You'll Ever Need (revised and updated edition) (New York: Harcourt Brace, 1996).
John Train, The Money Masters (New York: HarperCollins, 1994).
یه چند کتاب هم برای خوندن صورت های مالی گفته
How to Read a Financial Report by John A. Tracy;
How to Use Financial Statements by James Bandler
How to Read Financial Statements by Donald Weiss
Interpretation of Financial Statements by Benjamin Graham
کتاب هایی که گرین بلات معرفی کرده برای آشنایی با سرمایه گذاری رو در زیر میارم
David Dremen, Contrarian Investment Strategies: The Next Generation (New York: Simon & Schuster, 1988).
Benjamin Graham, The Intelligent Investor: A Book of Practical Counsel (New York: HarperCollins, 1986).
Robert Hagstrom, The Warren Buffett Way: Investment Strategies of the World’s Greatest Investor (New York: Wiley, 1994).
Robert Haugen, The New Finance: The Case Against Effective Markets (New York: Prentice Hall, 1995).
Seth A. Klarman, Margin of Safety (New York: Harper Business, 1991).
Peter Lynch and John Rothchild, One Up on Wall Street (New York: Simon & Schuster, 1993) and Beating the Street (New York: Simon & Schuster, 1994).
Andrew Tobias, The Only Investment Guide You'll Ever Need (revised and updated edition) (New York: Harcourt Brace, 1996).
John Train, The Money Masters (New York: HarperCollins, 1994).
یه چند کتاب هم برای خوندن صورت های مالی گفته
How to Read a Financial Report by John A. Tracy;
How to Use Financial Statements by James Bandler
How to Read Financial Statements by Donald Weiss
Interpretation of Financial Statements by Benjamin Graham
May 17, 2022
Warning: Investing as a layperson on the basis of the situations mentioned in the book can be highly risky to your capital. These one-off events are heavily contextual, industry specific and even people in the domain get the investing calls wrong most times.
Read it to understand various corporate machinations. Leave the investing to low cost index funds.
Read it to understand various corporate machinations. Leave the investing to low cost index funds.
September 12, 2019
The book provides extensive and interesting examples of opportunities that can be exploited in spinoffs, takeovers, mergers, corporate restructurings, right offerings, and, to your disbelief, bankruptcies. In other words, "special situations".
The book may be suitable more to those with finance and/or investment backgrounds but some experience in the stock market may be enough. The author has other books that are easier for the nonspecialists.
Published in 1997 so the examples will not be too recent but mostly still relevant and applicable.
The book may be suitable more to those with finance and/or investment backgrounds but some experience in the stock market may be enough. The author has other books that are easier for the nonspecialists.
Published in 1997 so the examples will not be too recent but mostly still relevant and applicable.
August 16, 2022
Despite the cheesy title, this is a fabulously detailed and informative book. It walks the reader through identifying event-driven and special situation investing opportunities, where to find them, how to analyze them (including very helpful tips on specific details to look for), and how to trade them. The book is somewhat dated but the concepts generally are still applicable.
Highly recommended as a *must read* for intermediate and advanced investors.
Highly recommended as a *must read* for intermediate and advanced investors.
June 3, 2020
A excellent exploration of some unique investment opportunities, and some ways to help you determine how far off the market’s pricing of a stock is.
I really enjoyed the writing style, it made reading about some relatively complex topics painless and even fun.
It’s certainly made me more keen to develop a greater understanding of how markets work.
I really enjoyed the writing style, it made reading about some relatively complex topics painless and even fun.
It’s certainly made me more keen to develop a greater understanding of how markets work.
August 7, 2012
This is the best book I've been able to find on event-driven investing. Greenblatt addresses mergers, spinoffs, recapitalizations, etc. What's more, he explains to the reader why these situations create so much opportunity. For example, spinoffs can divest a company's interest in a relatively small business or a business that is unrelated to their main business. Shareholders often unload the shares because they don't understand the smaller business or, for mutual funds, are forced sell due to the limits of their prospectus (limited region, market cap, etc.)
April 14, 2016
Agree with Tim Ferriss - this is a stupid book title but the book itself is very good.
It lays out how to find opportunities where nobody else is looking by taking advantage of your own research and seller psychology in a very straight forward and easy to digest way.
I honestly would never to think of investing in any of the areas Greenblatt suggest before this, but now I have a new lens to evaluate profitable opportunities.
It lays out how to find opportunities where nobody else is looking by taking advantage of your own research and seller psychology in a very straight forward and easy to digest way.
I honestly would never to think of investing in any of the areas Greenblatt suggest before this, but now I have a new lens to evaluate profitable opportunities.
February 21, 2015
The ideas are simple to understand. No rocket science here. Almost as though Joel was trying to teach primary school kids on how to earn some extra cash through stocks. However, do not take his words as a biblical practice. The book was written more than a decade back so you will still need to do your own homework if you really want to outperform the market.
September 13, 2015
Greenblatt introduces readers to the world of investing in special situations. He usually introduces the theories, give several case studies and then provides a summary. Very easy to read, great sense of humor. Highly recommend for those new in investments.
July 31, 2017
Have you read "The Big Short"? I got the reference for this book from it, yet never got a chance to sit down and actually read it. My main concern about the book was that it was published to long ago, before the crisis, before the modern stock exchange rules and terminologies. Still, I decided to give it a try.
It was absolutely worth it. The book is not selling you some mambo-jumbo crap on how to get rich in a minute, it provides you with the way of thinking. An easy read (if you are familiar with basic financial concepts) with a lot of humor and real life stories. This book literally made me laugh on numerous occasions and that made the reading even simpler and that much more enjoyable.
Highly recommended.
Grain of salt - I never played "The Game" so can't verify how effective it is.
It was absolutely worth it. The book is not selling you some mambo-jumbo crap on how to get rich in a minute, it provides you with the way of thinking. An easy read (if you are familiar with basic financial concepts) with a lot of humor and real life stories. This book literally made me laugh on numerous occasions and that made the reading even simpler and that much more enjoyable.
Highly recommended.
Grain of salt - I never played "The Game" so can't verify how effective it is.
April 22, 2017
Perfect book for beginning enterprising investors. Same goes for advanced investors wishing to find several motivated seller situations. Very well written: concise, full of wisdom and explaining/summarising motivated seller situations and why. Joel followed Einstein's advice 'Everything should be made as simple as possible, but no simpler'. Very powerful book!
November 16, 2018
Practically a gateway drug(book) to special situation investing. Witty writing style with real life (albeit old) cases make it so much more enjoyable. Even though I wish there were more details on the research process, I fully understand the author's intention to merely spark interest. The resources page is definitely worth bookmarking.
March 18, 2018
There a a few books, you'd wish you read earlier. This is one of those.
August 8, 2022
Five stars for the accessibility and easiness of reading this informative book about special subjects of the investment arena.
August 21, 2018
With this his first book, superstar investor Joel Greenblatt tried to bring the process that gave him his early success to the general public. Even though the author is broad within his niche - special situations - the area in itself is specialized and also highly labor intensive making the venture doomed to failure. Instead the book became an instant classic among hedge fund managers.
The basic premise of the book is that it pays off to search for areas where there is a high probability of finding undervalued equities. In contrasts to many other ventures, when it comes to investments you have the possibility to choose your battles and even your playing fields. No one will punish you for not doing something, only for doing stupid things. Therefore you can specialize in a specific type of investing. If there are no immediate opportunities in the chosen area you can always keep money in cash. So how do you find corners of the market where the competition is lower? The underlying theme in Greenblatt’s hunt is change, in the form of spin-off’s, mergers, restructurings, rights offerings, liquidations, asset sales, distributions etc. “Essentially, it all boils down to a simple two step process. First identify where you think the treasure [...] lies. Secondly, after you’ve identified the spot (preferably marked by a big red X), then, and only then, start digging. No sense (and no fun) digging up the whole neighborhood”.
The author dedicates chapters to several types of special situations such as merger securities, corporate restructurings and others. Spin-offs for example, have had a massive outperformance over the three years that follows the separation. The spun-off company’s shares are often sold regardless their merits either as the original investor was interested in the mother company in the first place or because the new company is too small. Combined with the fact that the management gets a real boost from being liberated from the old corporate overhead, this opens up for outsized returns. However, the investor should wait for the selling to ebb out before making his purchases. Which spin-offs offer the best value? Greenblatt advices to let insider buying be the judge of which spin-off’s to invest in.
There will in general be very little possible downside to a stock coming out of bankruptcy. After a bankruptcy the old equity holders will be wiped out and the old debt will have been turned to a combination of new debt and new equity. Hence the equity holders are the old bondholders. As they in most of the cases are fixed income investors the shares will be sold regardless of their merits which will make them cheap. Corporate information from the bankruptcy proceedings is available, most investors will be traumatized from previous ownership and the sell side doesn’t want to touch the stock. The author further advises to seek the good businesses that can deleverage.
There are only a very few books written on special situations investing making the book relatively unique. Despite the slightly esoteric area there is no doubt that Greenblatt is a devoted value investor seeking margins of safety, seeing risk as “permanent loss of capital” etc. He argues for deep research and focusing on the best ideas instead of broad diversification. Over time the portfolio will have many positions and it will have diversified over time instead of at any given time. “It’s better to do a lot ofwork on one idea than to do some work on a lot of ideas”. The book is written in a breezy easy-going style of writing that might fool you into doubting the quality of its advice. This would be a serious mistake. The logic is explained and there are some examples but – to bring up a negative - practical details are in rather short supply.
To succeed is probably two parts being at the right place at the right time and only one part perseverance, skill and intelligence. However, to navigate to the right place at the right time is a rare and underappreciated competence in itself.
The basic premise of the book is that it pays off to search for areas where there is a high probability of finding undervalued equities. In contrasts to many other ventures, when it comes to investments you have the possibility to choose your battles and even your playing fields. No one will punish you for not doing something, only for doing stupid things. Therefore you can specialize in a specific type of investing. If there are no immediate opportunities in the chosen area you can always keep money in cash. So how do you find corners of the market where the competition is lower? The underlying theme in Greenblatt’s hunt is change, in the form of spin-off’s, mergers, restructurings, rights offerings, liquidations, asset sales, distributions etc. “Essentially, it all boils down to a simple two step process. First identify where you think the treasure [...] lies. Secondly, after you’ve identified the spot (preferably marked by a big red X), then, and only then, start digging. No sense (and no fun) digging up the whole neighborhood”.
The author dedicates chapters to several types of special situations such as merger securities, corporate restructurings and others. Spin-offs for example, have had a massive outperformance over the three years that follows the separation. The spun-off company’s shares are often sold regardless their merits either as the original investor was interested in the mother company in the first place or because the new company is too small. Combined with the fact that the management gets a real boost from being liberated from the old corporate overhead, this opens up for outsized returns. However, the investor should wait for the selling to ebb out before making his purchases. Which spin-offs offer the best value? Greenblatt advices to let insider buying be the judge of which spin-off’s to invest in.
There will in general be very little possible downside to a stock coming out of bankruptcy. After a bankruptcy the old equity holders will be wiped out and the old debt will have been turned to a combination of new debt and new equity. Hence the equity holders are the old bondholders. As they in most of the cases are fixed income investors the shares will be sold regardless of their merits which will make them cheap. Corporate information from the bankruptcy proceedings is available, most investors will be traumatized from previous ownership and the sell side doesn’t want to touch the stock. The author further advises to seek the good businesses that can deleverage.
There are only a very few books written on special situations investing making the book relatively unique. Despite the slightly esoteric area there is no doubt that Greenblatt is a devoted value investor seeking margins of safety, seeing risk as “permanent loss of capital” etc. He argues for deep research and focusing on the best ideas instead of broad diversification. Over time the portfolio will have many positions and it will have diversified over time instead of at any given time. “It’s better to do a lot ofwork on one idea than to do some work on a lot of ideas”. The book is written in a breezy easy-going style of writing that might fool you into doubting the quality of its advice. This would be a serious mistake. The logic is explained and there are some examples but – to bring up a negative - practical details are in rather short supply.
To succeed is probably two parts being at the right place at the right time and only one part perseverance, skill and intelligence. However, to navigate to the right place at the right time is a rare and underappreciated competence in itself.
October 28, 2019
Marvelous. I wouldn't recommend that anyone else read this book (lest they steal the fun, new investing strategies that I stole).
July 2, 2021
“I hated the title but liked the book.” - Michael Burry
I first heard of this book in an article where Michael Burry was listing his favourite books on investing. Most of it was pretty standard fare - The Intelligent Investor, Security Analysis etc. This book stuck out like a sore thumb thanks to its title. It sounds like one of those books you find in airport bookstalls. That might have been one of the reasons it took me so long to get to it - I just didn't think the book would have anything new to offer. (Note to self: Never judge a book by its title and also punch yourself in the face)
The book is in a way Joel Greenblatt's playbook - the kind pick up artists have published from time to time. The only difference is - this one actually makes sense and might make you actual money. Joel is your sherpa through the world of Special Situations Investing which is exactly what it sounds like - taking advantage of certain catalysts(which can be foreseen) which will cause an underpriced security to move up in price. Margin of safety also gets into this but I think this book does a much better job explaining it with multiple real examples. The author does a tremendous job explaining the intricacies of complex financial transactions while not making it sound dry. In fact he infuses the book with such humour that I found myself chuckling and as someone who reads a lot of financial literature I can safely say that it is very rare for books in this genre to be able to do that. Usually these financial gurus have a lot of insights but they present them in such an unappealing manner that the message is somehow lost. That was not the case with this book at all - I enjoyed it a lot and was sad that it was so short. There are a few books that you regret not having read earlier - this one definitely falls in that category.
I first heard of this book in an article where Michael Burry was listing his favourite books on investing. Most of it was pretty standard fare - The Intelligent Investor, Security Analysis etc. This book stuck out like a sore thumb thanks to its title. It sounds like one of those books you find in airport bookstalls. That might have been one of the reasons it took me so long to get to it - I just didn't think the book would have anything new to offer. (Note to self: Never judge a book by its title and also punch yourself in the face)
The book is in a way Joel Greenblatt's playbook - the kind pick up artists have published from time to time. The only difference is - this one actually makes sense and might make you actual money. Joel is your sherpa through the world of Special Situations Investing which is exactly what it sounds like - taking advantage of certain catalysts(which can be foreseen) which will cause an underpriced security to move up in price. Margin of safety also gets into this but I think this book does a much better job explaining it with multiple real examples. The author does a tremendous job explaining the intricacies of complex financial transactions while not making it sound dry. In fact he infuses the book with such humour that I found myself chuckling and as someone who reads a lot of financial literature I can safely say that it is very rare for books in this genre to be able to do that. Usually these financial gurus have a lot of insights but they present them in such an unappealing manner that the message is somehow lost. That was not the case with this book at all - I enjoyed it a lot and was sad that it was so short. There are a few books that you regret not having read earlier - this one definitely falls in that category.
July 6, 2018
If you are a committed index investor (like I am) then you may want to pass on this book. However, if you are willing to experiment and take some risks with active strategies, the methods in this book are a great place to start.
May 26, 2013
An awesome book for people trying to make their mark on the stock market. Joel Greenblatt explains in a very simple manner the complexities of investing in stock market.
The book does not answer the "how" part of investing, it does not talk about the mechanisms of the stock market. Rather, it caters to a more fundamental question: the 'when' and 'where' to invest. The author, from his experience, has highlighted extraordinary events like spin-offs, mergers, restructurings etc where people can make easy money. This is mainly because all the shareholders fell bearish at such an event and the securities are available at a discounted price due to heavy selling. The author also explains the key information one must look for when deciding whether to invest or not, like the level of debt being transferred, insider/management ownership etc.
Identifying where to invest becomes very easy with this approach. But knowing when to get out of the trade remains to astonish much of the investor community. The author, with the descriptions of his trades, has outlined a framework for this task.
Undoubtingly, this book should be on the shelves of each and every stock market whiz.
The book does not answer the "how" part of investing, it does not talk about the mechanisms of the stock market. Rather, it caters to a more fundamental question: the 'when' and 'where' to invest. The author, from his experience, has highlighted extraordinary events like spin-offs, mergers, restructurings etc where people can make easy money. This is mainly because all the shareholders fell bearish at such an event and the securities are available at a discounted price due to heavy selling. The author also explains the key information one must look for when deciding whether to invest or not, like the level of debt being transferred, insider/management ownership etc.
Identifying where to invest becomes very easy with this approach. But knowing when to get out of the trade remains to astonish much of the investor community. The author, with the descriptions of his trades, has outlined a framework for this task.
Undoubtingly, this book should be on the shelves of each and every stock market whiz.
January 16, 2016
Originally published in 1997, 1CYou Can Be A Stock Market Genius 1D remains popular today and is enthusiastically endorsed in a number of reviews on the internet. The author, Joel Greenblatt, ran hedge fund Gotham Capital racking up a 50% average annual return over a 10 year period spanning the mid 80 19s to the mid 90 19s. 1CYou Can Be A Stock Market Genius 1D reveals how he did it and suggests that a motivated individual could do it too, even if he wasn 19t all that smart. Mr. Greenblatt has since acknowledged in subsequent books that these methods require more work than the average individual investor can muster. His two subsequent books 1CThe Little Book That Beats the Market 1D and 1CThe Big Secret for the Small Investor 1D suggest stock screening methods that outperform the market without much effort from the individual.
May 18, 2022
A really eye opening book if you are fairly new to investing.
It could have been even career changing if you read it near the time it got out. It is still a very useful book that makes feel like you "know things now" after you read it.
Of course these things are now known by most of the market since this book has become notorious.
But you will seriously appreciate Joel Greenblatt for putting in the time and the effort when he really didn't need to, to let newbies in the market in on a valuable secret that could make their lives much simpler and their endeavors much more fruitful.
It is not a book that you read if you are completely new to investing. Peter Lynch's One Up on Wall Street would be a better place to start, but once you feel like you are getting the hang of how things are, this book here is the place you should come to next.
It could have been even career changing if you read it near the time it got out. It is still a very useful book that makes feel like you "know things now" after you read it.
Of course these things are now known by most of the market since this book has become notorious.
But you will seriously appreciate Joel Greenblatt for putting in the time and the effort when he really didn't need to, to let newbies in the market in on a valuable secret that could make their lives much simpler and their endeavors much more fruitful.
It is not a book that you read if you are completely new to investing. Peter Lynch's One Up on Wall Street would be a better place to start, but once you feel like you are getting the hang of how things are, this book here is the place you should come to next.
April 12, 2018
The book has the lamest title, and the first impression isnt good when the author starts the introduction with regurping Ben Graham's Intelligent investor.
But from there on the book improves. It shows examples of special situations - which I have spendt a long time trying to learn from seasoned traders at chat-forums like Xtrainvestor.com. There are opportunitites like bankruptcy, IPO's , Spinoffs and mergers where the efficient market hypotesis clearly is invalid - and Mr. Market rules.
“What could be more advantageous in an intellectual contest – whether it be bridge, chess, or stock selection than to have opponents who have been taught that thinking is a waste of energy?” –Warren Buffett, 1985 Berkshire Hathaway Letter to Shareholders
But from there on the book improves. It shows examples of special situations - which I have spendt a long time trying to learn from seasoned traders at chat-forums like Xtrainvestor.com. There are opportunitites like bankruptcy, IPO's , Spinoffs and mergers where the efficient market hypotesis clearly is invalid - and Mr. Market rules.
“What could be more advantageous in an intellectual contest – whether it be bridge, chess, or stock selection than to have opponents who have been taught that thinking is a waste of energy?” –Warren Buffett, 1985 Berkshire Hathaway Letter to Shareholders
August 25, 2021
This is a rather easy read about some of the tactics used by fundamental investors. As compared to some other books of a similar nature about fundamental analysis, the author writes in layman’s terms mostly coupled with numerous case studies. At times, Greenblatt writes in a way as if like he is talking to the reader.
However I do agree with most of other reviewers that this book is rather dated. It would offer greater value if one were to read this two decades ago as some of the policies and market behaviours have fundamentally changed. This is especially true with the advent of HFT and high-speed internet.
Some topics include: analysing prospect spin-offs from "parent company" press and SEC releases, risk arbitrage and merger securities etc.
However I do agree with most of other reviewers that this book is rather dated. It would offer greater value if one were to read this two decades ago as some of the policies and market behaviours have fundamentally changed. This is especially true with the advent of HFT and high-speed internet.
Some topics include: analysing prospect spin-offs from "parent company" press and SEC releases, risk arbitrage and merger securities etc.
December 31, 2022
after twenty years of compounding even 2 percent extra per year creates a 50 percent larger nest egg
It turns out that diversification addresses only a portion (and not the major portion) of the overall risk of investing in the stock market. Even if you took the precaution of owning 9,000 stocks, you would still be at risk for the up and down movement of the entire market. This risk, known as market risk, would not have been eliminated by your “perfect” diversification.
While simply buying more stocks can’t help you avoid market risk, it can help you avoid another kind of risk— “nonmarket risk.” This type of risk can arise when a company’s factory burns down or when a new product doesn’t sell as well as expected.
Statistics say that owning just two stocks eliminates 46 percent of the nonmarket risk of owning just one stock. This type of risk is supposedly reduced by 72 percent with a four-stock portfolio, by 81 percent with eight stocks, 93 percent with 16 stocks, 96 percent with 32 stocks, and 99 percent with 500 stocks.
After purchasing six or eight stocks in different industries, the benefit of adding even more stocks to your portfolio in an effort to decrease risk is small
The universe of stocks not owned by a customer is always much larger than the list of those currently owned. Consequently, it’s much easier to generate commissions from new “Buy” recommendations than from recommendations to sell.
It’s much safer to be wrong in a crowd than to risk being the only one to misread a situation that everyone else pegged correctly. As a result, getting fresh, independent thinking from analysts is the exception, not the norm.
For the uninitiated, Color War was a week-long ritual each summer in which the entire camp was divided into two teams, the Blue and the Gray.
The advantage of one team over the other, unlike some other competitions, did not necessarily hinge on which team had the stronger or faster athletes, but rather on which team had been lucky enough to get David Versotski. David had the task of serving three net serves in Ping-Pong
always something like, “Don’t worry—we have Versotski!”
Risk, according to generally accepted wisdom, is defined as the risk of receiving volatile returns. In the academic world, risk is measured by a stock’s “beta”. A stock that has fallen from 30 to 10 is considered riskier than a stock that has fallen from 12 to 10 in the same period. Although both stocks can now be purchased for $10, the stock which has fallen the farthest, and the one that is now priced at the biggest discount to its recent high price, is still considered the “riskier” of the two. It might be. But it could be that most of the stock’s downside risk has been eliminated by the huge price drop.
Graham generally used objective measures like a stock’s book value (the company’s net worth as disclosed on its balance sheet) and its price/earnings ratio (the price of a stock relative to its annual earnings— a.k.a. its P/E ratio) to help calculate a company’s true value. His advice was to purchase stocks only when they traded at a significant discount to this value.
Buffett has found that investing in fundamentally good businesses, as opposed to investing solely in stocks priced cheaply in a strict statistical sense, can add dramatically to investment returns.
Ben Graham’s statistical approach was actually designed with the individual investor in mind. A widely diversified portfolio of stocks with low P/E ratios and low price-to-book ratios still produces excellent results and is relatively easy to emulate. Graham figured that if you owned twenty or thirty of these statistical bargains, you didn’t need to do extensive research.
public filings that companies are required to make with the SEC, was available but largely inaccessible. private corporations charging up to $200 or $300 for one document. Now, this same information is instantly available
As there is a tax advantage for many people from receiving long-term capital gains (from investments held more than one year), and an advantage for everyone in deferring their taxable gains by not selling appreciated securities, a short holding period in some of these situations creates a disadvantage compared to the long-term strategies of Buffett, Lynch, and Graham. Fortunately, you can avoid some of these disadvantages either by investing in only those situations that take several years to fully play out or by investing through your pension, IRA, or other retirement accounts.
In some cases, a bank or insurance subsidiary may subject the parent company or the subsidiary to unwanted regulations. A spinoff of the regulated entity can solve this problem.
During the 1980s, Marriott Corporation aggressively expanded its empire by building a large number of hotels. However, the cream of their business was not owning hotels, but charging management fees for managing hotels owned by others. Their strategy, which had been largely successful, was to build hotels, sell them, but keep the lucrative management contracts for those same hotels.
I’m a contrarian. That doesn’t mean I’ll jump in front of a speeding Mack truck, just because nobody else in the crowd will. It means that if I’ve thought through an issue I try to follow my own opinion even when the crowd thinks differently.
Are the managers of the new spinoff incentivized along the same lines as shareholders? Will they receive a large part of their potential compensation in stock, restricted stock, or options?
Stephen Bollenbach, the architect of the plan, was to become Host’s chief executive. Of course, as the paper reported, he had just helped Donald Trump turn around his troubled hotel and gambling empire. In that respect, he seemed a fine candidate for the job.
It turns out that diversification addresses only a portion (and not the major portion) of the overall risk of investing in the stock market. Even if you took the precaution of owning 9,000 stocks, you would still be at risk for the up and down movement of the entire market. This risk, known as market risk, would not have been eliminated by your “perfect” diversification.
While simply buying more stocks can’t help you avoid market risk, it can help you avoid another kind of risk— “nonmarket risk.” This type of risk can arise when a company’s factory burns down or when a new product doesn’t sell as well as expected.
Statistics say that owning just two stocks eliminates 46 percent of the nonmarket risk of owning just one stock. This type of risk is supposedly reduced by 72 percent with a four-stock portfolio, by 81 percent with eight stocks, 93 percent with 16 stocks, 96 percent with 32 stocks, and 99 percent with 500 stocks.
After purchasing six or eight stocks in different industries, the benefit of adding even more stocks to your portfolio in an effort to decrease risk is small
The universe of stocks not owned by a customer is always much larger than the list of those currently owned. Consequently, it’s much easier to generate commissions from new “Buy” recommendations than from recommendations to sell.
It’s much safer to be wrong in a crowd than to risk being the only one to misread a situation that everyone else pegged correctly. As a result, getting fresh, independent thinking from analysts is the exception, not the norm.
For the uninitiated, Color War was a week-long ritual each summer in which the entire camp was divided into two teams, the Blue and the Gray.
The advantage of one team over the other, unlike some other competitions, did not necessarily hinge on which team had the stronger or faster athletes, but rather on which team had been lucky enough to get David Versotski. David had the task of serving three net serves in Ping-Pong
always something like, “Don’t worry—we have Versotski!”
Risk, according to generally accepted wisdom, is defined as the risk of receiving volatile returns. In the academic world, risk is measured by a stock’s “beta”. A stock that has fallen from 30 to 10 is considered riskier than a stock that has fallen from 12 to 10 in the same period. Although both stocks can now be purchased for $10, the stock which has fallen the farthest, and the one that is now priced at the biggest discount to its recent high price, is still considered the “riskier” of the two. It might be. But it could be that most of the stock’s downside risk has been eliminated by the huge price drop.
Graham generally used objective measures like a stock’s book value (the company’s net worth as disclosed on its balance sheet) and its price/earnings ratio (the price of a stock relative to its annual earnings— a.k.a. its P/E ratio) to help calculate a company’s true value. His advice was to purchase stocks only when they traded at a significant discount to this value.
Buffett has found that investing in fundamentally good businesses, as opposed to investing solely in stocks priced cheaply in a strict statistical sense, can add dramatically to investment returns.
Ben Graham’s statistical approach was actually designed with the individual investor in mind. A widely diversified portfolio of stocks with low P/E ratios and low price-to-book ratios still produces excellent results and is relatively easy to emulate. Graham figured that if you owned twenty or thirty of these statistical bargains, you didn’t need to do extensive research.
public filings that companies are required to make with the SEC, was available but largely inaccessible. private corporations charging up to $200 or $300 for one document. Now, this same information is instantly available
As there is a tax advantage for many people from receiving long-term capital gains (from investments held more than one year), and an advantage for everyone in deferring their taxable gains by not selling appreciated securities, a short holding period in some of these situations creates a disadvantage compared to the long-term strategies of Buffett, Lynch, and Graham. Fortunately, you can avoid some of these disadvantages either by investing in only those situations that take several years to fully play out or by investing through your pension, IRA, or other retirement accounts.
In some cases, a bank or insurance subsidiary may subject the parent company or the subsidiary to unwanted regulations. A spinoff of the regulated entity can solve this problem.
During the 1980s, Marriott Corporation aggressively expanded its empire by building a large number of hotels. However, the cream of their business was not owning hotels, but charging management fees for managing hotels owned by others. Their strategy, which had been largely successful, was to build hotels, sell them, but keep the lucrative management contracts for those same hotels.
I’m a contrarian. That doesn’t mean I’ll jump in front of a speeding Mack truck, just because nobody else in the crowd will. It means that if I’ve thought through an issue I try to follow my own opinion even when the crowd thinks differently.
Are the managers of the new spinoff incentivized along the same lines as shareholders? Will they receive a large part of their potential compensation in stock, restricted stock, or options?
Stephen Bollenbach, the architect of the plan, was to become Host’s chief executive. Of course, as the paper reported, he had just helped Donald Trump turn around his troubled hotel and gambling empire. In that respect, he seemed a fine candidate for the job.
April 25, 2022
- cringey title but a recommendation from my boss
- due to constraints of fund managers certain corporate situations force them to exit investments creating opportunities
- spin-off, risk arb, recapitalisation, restructurings all offer potential alpha
- look into if the incentives are aligned with management i.e. are they compensated in stock?
- patience is important when waiting for the right opportunity but don’t overweight into that position
- recapitalisations offer private equity like returns in public markets
- Greenblatt backed michael burry from the big short, he didn’t give permission for his name to be used in the film though lol
- due to constraints of fund managers certain corporate situations force them to exit investments creating opportunities
- spin-off, risk arb, recapitalisation, restructurings all offer potential alpha
- look into if the incentives are aligned with management i.e. are they compensated in stock?
- patience is important when waiting for the right opportunity but don’t overweight into that position
- recapitalisations offer private equity like returns in public markets
- Greenblatt backed michael burry from the big short, he didn’t give permission for his name to be used in the film though lol
December 16, 2015
Overall, a very well written and straight forward book on investing.
This book has opened up a whole new area of investment that was unknown to me. And while I might fail at implementing some of these strategies, I am very excited to at least start the process of trying to uncover some hidden opportunities.
Joel Greenblatt gives you a disciplined approach to seeking out bargains that ultimately seems to pay off. With a bit of time and effort, the average investor can gain from the strategies in this book... Now it's time for me to go ahead and try!
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