You Can Be A Stock Market Genius PDF Summary
Dear readers, here we are presenting the You Can Be A Stock Market Genius PDF to all of you. The complete name of this book is You Can Be a Stock Market Genius: (Even if You’re Not Too Smart!) Uncover the Secret Hiding Places of Stock Market Profits. It was originally published in 1997.
You Can Be A Stock Market Genius received a 4.2/5 rating on Amazon and 4.2/5 on Goodreads. This amazing guide was written by Joel Greenblatt who is an American academic, hedge fund manager, investor, and writer. He was born on 13 December 1957 in Great Neck, New York, United States.
You Can Be A Stock Market Genius PDF – Guide Overview
- The book outlines an array of so-called “special situations” that may offer very profitable opportunities for the investor who is willing to go off the main road of investing by double-clicking on i.e. bankruptcies, restructurings, and spinoffs.
- Joel underscores the importance of a set of basic ‘rules’ when delving into the universe of special situations: do your own work, don’t trust anyone, pick your spot and assess the downside, not the upside.
- The book summary looks closer into spinoffs: why they occur, what to look for, and where to find them.
The author of The Little Book That Beats the Market, Joel Greenblatt, has written yet another very entertaining book. In You Can Be a Stock Market Genius, Joel outlines the “secret hiding places” of investing ideas. He takes the reader off the main street and discusses all kinds of so-called ‘special situations’ and how you might be able to find, analyze and profit from them, i.e. risk arbitrage, merger securities, bankruptcies, restructurings, recapitalizations, LEAPS, warrants, options, and spinoffs.
The latter, spinoffs, resonates most with yours truly, so I’ll dedicate this book summary to reviewing the opportunities in this sphere alongside some “basics” – let’s start there! Before Joel throws you into the deep end of the special situations pool, he puts some swimming on you in the shape of fundamental lessons.
You can be a stock market genius: uncover the secret hiding places of stock market profits PDF
- In the sphere of special situations, you will often find yourself off the main road. You’ll be looking at, well, special situations – you’ll turn stones that few others turn. Hence, you need to do your own work. You’ll find little to no research from other analysts or the media – and if you do, don’t trust them.
- In life, you can’t always choose your battles or the playing field. In investing, you can. Warren Buffett likes to say: “There are no called strikes on Wall Street”, meaning you can choose which pitches to swing at. Joel shares that reasoning, as he states: “It makes sense that if you limit your investments to those situations where you are knowledgable and confident and only those situations, your success rate will be very high.” (p. 34)
- Hence, pick a spot where you are “knowledgable and confident”. Academics and most investment managers don’t understand the elusive concept of risk. It’s puzzling that some people still think a stock’s volatility – beta – is a measure of risk.
- As so often proclaimed here on the blog, the risk is the probability of a permanent loss of capital. In length, that’s why Joel advises the reader to look down, not up. In other words: Let your assessment of the downside guide your investment decision, and let the upside take care of itself.
- One last thing before we delve into spinoffs. Joel had a refreshing, substantiated opinion about an otherwise flighty question: what is the optimal number of positions in your portfolio? Warren always says he prefers a concentrated portfolio, as it doesn’t make sense to allocate capital to your twentieth favorite idea when you can pile it into your absolute favorite.
- Obviously, some diversification is needed, but how much? Joel says that “nonmarket risk is the portion of a stock’s risk that is not related to the stock market’s overall movements.”, and that “statistics say that owning just two stocks eliminates 46% of the nonmarket risk of owning just one stock.” (p. 21)
- A four-stock portfolio: 72%; eight stocks, 81%; 16 stocks, 93%; 32 stocks, 99%. The conclusion? “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.”(p. 21)
About the Authors of You Can Be A Stock Market Genius PDF
|Born||13 December 1957 (age 64 years), Great Neck, New York, United States|
|Education||Wharton School of the University of Pennsylvania|
|Children||Matthew Greenblatt, Rebecca Greenblatt, Jonathan Greenblatt, Melissa Greenblatt, Jordon Greenblatt|
|Alma mater||Wharton School of the University of Pennsylvania|
|Occupation||· Managing Principal and Co-Chief Investment Officer of Gotham Asset Management
· Founder of the New York Securities Auction Corporation
· Former chairman of the board of Alliant Techsystems
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