You Can Be a Stock Market Genius by Joel Greenblatt

When thinking of stock market geniuses, Joel Greenblatt is sure to come to mind. With decades of experience and knowledge in the investing world, Greenblatt has made his mark. Author of the incredibly successful book 'You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits', Greenblatt offers simple yet innovative investing strategies that can help aspiring investors become stock market geniuses.

The book starts off by introducing investors to the world of investing and the importance of diversification in any portfolio. Greenblatt emphasizes the three primary elements that make an investor a 'genius' – recognizing opportunities, managing risk and gaining knowledge. He explains that being able to recognize investment opportunities is of paramount importance. Investors who are able to spot opportunities often can achieve a stellar return on their investments while minimizing their risk.

Greenblatt then dives deeper into the different investing strategies available to investors. He provides simple yet effective strategies that can be used by beginner and sophisticated investors alike. Among the strategies he highlights include spinoffs, restructuring, merger arbitrage and venture capital. With every strategy, Greenblatt offers a comprehensive breakdown of how each one works and the best way to maximize its potential.

Spinoff investing is one of the concepts further detailed in the book. Here, Greenblatt explains how investors can benefit from parent companies’ spinoffs. Essentially, when a large conglomerate spins off a portion or subsidiary of the business, it creates an opportunity to purchase the newly-minted stock at possibly a discounted price. Renowned investors have long taken advantage of this concept, Greenblatt included.

Another strategy Greenblatt examines is merger arbitrage. This involves investing in the stocks of companies that have announced a merger. As Greenblatt puts it, “Since the merger is not a sure thing, the stock may gear its price to the risk that the deal may not successfully close.” The book provides investors the proper tools needed to size up the risks of merger arbitrage without the fear of taking on too much risk. For example, it explains the need to calculate potential required rate of return, appreciation, liquidation value and much more in order to know when to get in and out of a position.

The book also outlines how investors can look to venture capital as a potential investment opportunity. By investing in early-stage companies, investors can not only get in at a potential bargain, but can also be in on competitive returns should the company take off. Of course, this isn't without risk as the companies that are being invested in are typically quite young.

In short, Greenblatt's 'You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits' is the perfect book for any investor looking to become a 'genius'. The book provides a comprehensive overview of the different investing strategies available to capital markets investors and paints a clear picture of how to succeed at each one. Through his simple yet effective strategies, Greenblatt has once again made his mark as a titan within the investment world.