You Can be a Stock Market Genius
Given the title of this much-hyped 1997 investment book, you can almost imagine the author twanging his red braces and giving it his full Gordon Gekko growl in the author pic.
But the title doesn’t do the book justice. It’s not some flashy guru-driven set of platitudes about how you, too, can amass a stock market fortune.
It’s much more thoughtful and grown-up than the title suggests.
No magic bullet
This book does not have any magic bullet to help you get rich overnight, but it gives the reader something far more valuable – a repeatable process.
If you’re willing to put in the effort and are a contrarian by nature, you will have some fertile ground to exploit, as the book provides experienced individual investors with ideas to add unique and profitable positions to their portfolios.
He does this by focusing on special situation strategies.
These special situations are:
Spin-offs
Mergers/Risk Arbitrage (he advises against risk arbitrage)
Merger Securities
Bankruptcies (not actually investing in bankrupt companies but rather in what results from them)
Restructurings
Rights Offerings
Recapitalisations
Find the value
This isn’t really beginners’ stuff. Each of these strategies require a reasonable knowledge of finance, accounting, and investing.
But for moderately experienced investors, Goldblatt provides strategies in niches of the market that may not be as well covered as other more mainstream investment strategies.
The book is written with the idea that anyone could pick it up and maybe learn something about value investing, but it also contains reams of information that would be useful to any experienced investor with a value perspective.
Greenblatt certainly gives you perspective as to where value is frequently found, and how an investor can take advantage of inefficiencies in the market.
Contrarians rule
Greenblatt’s focus is particularly relevant now in these times of market uncertainty, because investing a portion of your portfolio in special situations could arrest or slow the slide from a falling market.
Furthermore, special situations occur independently of the market.
Opportunities arise in bear markets (spin-offs, bankruptcies, restructurings) as well as in bull markets (mergers, recaps).
This is meaty, interesting stuff and proof that contrarian approaches to the markets are usually the most interesting and often the most profitable.
Paul Connolly
Paul Connolly has been a journalist for more than 20 years, as a reporter and editor for Argus Media, Reuters, The Times, Associated Newspapers and The Guardian. He has covered Islamic Finance for Reuters in the 1990s. Paul has since helped launch three newspapers, as well as reported from Tokyo, Los Angeles and Stockholm.
