You Can Be a Stock Market Genius - Joel Greenblatt
An investment book that explains how to profit from mergers, bankruptcies, liquidations, spin-offs, and rights offerings.
That title sounds absurd because conventional wisdom says that individual investors cannot beat the market or professional investors. In the opening chapters, though, Greenblatt goes to some length to explain why the small investor -- without portfolios totaling hundreds of millions or billions of dollars --has an advantage over professional investors. One, we can stay focused. We don't have to invest in our eightieth or hundredth best idea, but we can stay within our best 10. Two, we can judge ourselves on a much longer time scale than next quarter. Three, we can afford to wait for that fat pitch, that situation that will have an outsized impact on our portfolio.
The rest of the book highlights some of the situations Greenblatt has found in his investing career that can lead to outsized returns. He starts off with a relatively simple area of investing, spinoffs. By looking at several case studies, he shows why investing in this type of corporate restructuring can lead to good things.
Greenblatt is also discussing in this book risk arbitrage and mergers, bankruptcies, warrants and options, and other related areas.
Includes a section listing worthwhile investing books and publications as well as a good discussion of cash flow. The cherry on top is an often humorous glossary.
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