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31 of 32 people found the following review helpful
4.0 out of 5 stars Awful title, Excellent book
1999 Fireside reissue of 1st edition (1997), 299 pages (of which 261 pages form the main body of the book).

Despite the awful title, I really enjoyed `You can be a Stock Market Genius'. Greenblatt laces his (excellent) content with plenty of jokes, which I always think of as a somewhat risky approach: some readers who would otherwise appreciate the content will...
Published on 10 Jan 2008 by Andrew Barrett

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18 of 19 people found the following review helpful
3.0 out of 5 stars A great book for Wall Street Novice
Many readers probably never realized that this book gives out some of the best money-making secrets on Wall Street (somebody has to blow the whistle, right?). Everything explained in this book is real and is practiced by a wide array of firms such as investment banks, brokerage houses, and institutional investors. Each year, instituions spent billions of dollars...
Published on 2 Jun 1999


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31 of 32 people found the following review helpful
4.0 out of 5 stars Awful title, Excellent book, 10 Jan 2008
By 
Andrew Barrett (UK) - See all my reviews
(REAL NAME)   
This review is from: You Can be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits (Paperback)
1999 Fireside reissue of 1st edition (1997), 299 pages (of which 261 pages form the main body of the book).

Despite the awful title, I really enjoyed `You can be a Stock Market Genius'. Greenblatt laces his (excellent) content with plenty of jokes, which I always think of as a somewhat risky approach: some readers who would otherwise appreciate the content will not like the delivery.

By the time of publication, Greenblatt's investment firm had already achieved 50% compound annual growth for 10 years, so could write his book however he pleased. I like it when people don't need to write books for financial reasons - you get a better look at the author.

Greenblatt's book reminds me strongly of Mohnish Pabrai's `The Dhandho Investor', which I read a few months ago. I don't think one should be particularly surprised, as they both belong in that tiny group of investors who have not just beaten the stock market, but have absolutely smashed it. The following summary points for `You can be a Stock Market Genius' could be used for either book:

1. Concentrate your efforts on areas where bargains are likely to occur ("If you preselect investment areas that put you ahead of the game even before you start ... the most important work is already done.")
2. Limit downside risk ("If you don't lose money, most of the remaining alternatives are good ones.")
3. Load up on only a few best ideas ("...don't screw up a perfectly good stock-market strategy by diversifying your way into mediocre returns.")

The second point, which is the same as the concept of `margin of safety,' works because it - unlike the world of analyst earnings forecasts - acknowledges the severe uncertainty that is reality. I particularly enjoyed Nassim Taleb's `The Black Swan', partly because the world he reveals ties in so well with the `value' approach to investing. Both good and bad large, unpredictable events occur more frequently than we expect. If you organise your investing (and your life) so that you are protected from some of the negative shocks, but left exposed to the positive ones, this is likely to serve you well.

Pabrai focuses on distressed situations (what he calls `high uncertainty, low risk') and Greenblatt likes special situations (spin-offs, merger securities, etc). But the theme is the same: in order to get really good results you've got to be looking in areas other people are not.

Greenblatt is willing to concentrate more than Pabrai, who simply limits his positions to a maximum 10%, to protect himself against error. But these are differences in style rather than substance. They both look for promising situations/ideas and only then do the necessary work. Both profess to avoid use of Excel spreadsheets (In 2006 Greenblatt was asked if he used spreadsheets: "I really don't know how to build spreadsheet models. But the good news is that you don't need spreadsheets to make money.") In other words, they keep it simple.

Before he gets into the specifics of special situation investing, Greenblatt spends a chapter going over `some basics'. This short section of the book is either an excellent primer or reminder of the general requirements of a successful investment strategy - and I commend it to you without reservation.

His book also contains some excellent advice about selling. It is something I have been thinking about a lot recently after reading Pabrai's `The Dhandho Investor' and Katsenelson's `Active Value Investing' - both of which make a strong case for the need to learn to sell in order to get significantly above market returns. The problem with this advice is that selling well is somewhere between extremely difficult and impossible (as various super investors, such as Greenblatt, Marty Whitman, Munger, etc. have said).

Greenblatt's advice is very simple:

"The bargain created or unmasked by the special corporate event - that's what draws me in. The quality and nature of the business - that's what usually determines how long I stay. So trade the bad ones, invest in the good ones."

(You may note that this is essentially the same as Buffett's counsel, who wrote: "when we own portions of outstanding businesses with outstanding managements, our favourite holding period is forever.")

I was struck by how often Greenblatt rammed home the importance of incentives throughout his book:

"Insider participation is one of the key areas to look for when picking and choosing between spinoffs - for me, the most important area."

His understanding of the critical importance of incentives is very wise and is surely one of the key reasons for his outstanding success (although I wonder if he still holds stock options in such high regard, now it is clearer that the lack of downside risk can encourage excessively risky behaviour?). Charlie Munger said this about incentives in `The Psychology of Human Misjudgement':

"...almost everyone thinks he fully recognizes how important incentives and disincentives are in changing cognition and behaviour. But this is not often so. I think I've been in the top five percent of my age cohort almost all my adult life in understanding the power of incentives, and yet I've always underestimated that power. Never a year passes but I get some surprise that pushes a little further my appreciation of incentive super-power."

It's also one of the reasons why I like Karen Pryor's book, `Don't Shoot the Dog,' so much. Munger pointed out in the same talk I quoted him from above, that what economists call `incentives' is the same as what psychologists call `reinforcement'. Reading an excellent book on training using positive reinforcement (like Pryor's) is thus extremely useful in improving your understanding and critically, practice of making use of incentives.

So long as you're not the type who objects to a light-hearted approach, you're likely to find Greenblatt's book a lot better than the title suggests. Highly recommended.
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18 of 19 people found the following review helpful
3.0 out of 5 stars A great book for Wall Street Novice, 2 Jun 1999
By A Customer
Many readers probably never realized that this book gives out some of the best money-making secrets on Wall Street (somebody has to blow the whistle, right?). Everything explained in this book is real and is practiced by a wide array of firms such as investment banks, brokerage houses, and institutional investors. Each year, instituions spent billions of dollars doing exactly the kind of transactions explained in the book. A successful risk arbitrageur in a major investment bank makes about $200-300 millions for the firm, which translates to $2-3 millions in his/her own pocket. Readers may discover that, after all, the good old secrets of Wall Street are simple to understand (Yes, if you can add, subtract and divide, you are qualified to work in 90% of the departments in an investment firm). The language is witty and lively. Case examples make this book extremely charming. However, despite its snappy title, this book fails to appeal the professional crowd. As a professinal myself, I certainly expect the book to skip trivial analogies and expand on technical details. Still, this is a great book for beginners, whether you are a personal investor who is just starting, or someone who wants to get your feet wet on Wall Street. Welcome to the world of greed, capitalism, and lucrative profits!
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5 of 5 people found the following review helpful
5.0 out of 5 stars The best book I've found for making real money in stocks!, 28 Mar 1999
By A Customer
Joel Greenblatt really introduces new concepts and ideas into the investing world. You won't find the same old information thrown around again, and you won't find a new number crunching method or explanation. You'll find really inventive thinking. After reading books from Benjamin Graham and Phillip Fisher, it is interesting that there is a book that really does teach me somethings I didn't know.
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4 of 4 people found the following review helpful
5.0 out of 5 stars the best investment book in a long time, 5 May 1997
By A Customer
This book is witty engaging and filled with solid advice.Greenblatt's methods are quite different than those of a standard value investor. He points out potential areas in which value is likely to be found, namely spinoffs, mergers, bankruptcies and such "special situations". He does not minimize the amount of work needed to verify that an idea really represents value, but he claims that it should not be too hard to find several good values every year, which is all the individual investor needs (his advantage over a mutual fund). This book goes on my very short list of stock market classics, along with Klarman's Margin of Safety.
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2 of 2 people found the following review helpful
5.0 out of 5 stars An excellent guide to good investment opportunities!, 20 Sep 1997
By A Customer
I just finished reading Joel's book. I've yet to try his strategy to my own investing, but my goal is to do just that. Joel lays out a road map on how to find and evaluate little known investment opportunities. You still have to do some work and keep your eyes open, but he makes it seem worth while. I highly recommend reading this book! - Ted
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1 of 1 people found the following review helpful
5.0 out of 5 stars Excellent discussion of hidden value and arbitrage opps., 20 Sep 1998
By A Customer
Greenblatt's book is an excellent, easy to read explanation for why such apparently unappealing Wall Street actions as corporate spinoffs are actually a terrific investment opportunity. Through sample cases and anecdotes, the author gives an excellent discussion of the fundamentals of good investments, from upside potential of stocks to managerial incentives.
I strongly recommend this book to anyone interested in learning about some of the black and white fundamentals of the market.
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1 of 1 people found the following review helpful
5.0 out of 5 stars FANTASTIC!, 20 Aug 1997
By A Customer
If you are just starting out, or an experienced investor, this book is a must read! I could not put it down once I started. There are many insightful "clues" that the author outlines and these are woven together with past case studies to present a picture of what one might look for in future opportunities. This should be required reading for anyone interested in investing! Thanks to Joel Greenblatt for giving us his secrets.
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5.0 out of 5 stars Great book by a great investor, 15 Nov 2009
By 
Mariusz Skonieczny "Author" (classicvalueinvestors com) - See all my reviews
(REAL NAME)   
This review is from: You Can be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits (Paperback)
Joel Greenblatt is by far one of the most successful value investors this country has ever seen. In this book, he shows readers how he does it. He invests in places where other investors do not want to go. Some of the places include spinoffs, risk arbitrage, bankruptcy, restructuring, recapitalizations, LEAPS, and warrants. Because these special situations are complicated, many traditional money managers ignore them and this creates inefficiencies in the market that investors can exploit.

I like how at the beginning of this book, he describes to readers that it is possible to beat the smart money on Wall Street. These big money managers have certain challenges that individual investors do not have. For example, funds managing billions of dollars are unlikely to invest in small-cap companies. They simply manage too much money. Individual investors do not have this restriction. I highly recommend this book and his other book, The Little Book That Beats the Market.

- Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market
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5.0 out of 5 stars A must read for any advance investor., 12 Jun 1997
By A Customer
Don't be turned off by the book's funky title. "You can be astock market genius" is actually one of the few investment classics out there. The book does not deal with everyday investment jargons. (Low PE, high growth rate, etc.) Instead, it focuses on rare special corporate events. And how investors may profit by looking through these small cracks which the greater investment community often ignored and misunderstood. Although I doubt many individual investors will be able to fully utilize what the author suggested. (It is a difficult proccess which required substantial background in related areas.) These corporate events are often quite unique in each individual case. And some of them carry tremendous risk. (eg. bankruptcy) Yet, if use properly. These methods can dramatically magnify one's return. (For instance, the section where he discussed how investors can use Leaps in turnaround situations.) Even for those readers who do not attempt to participate in special situation investing, Mr. Greenblatt's logic and methods are very beneficial in shaping investment decisions in general.
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1 of 1 people found the following review helpful
5.0 out of 5 stars This book is the best investment book ever written., 17 May 1997
By A Customer
Joel Greenblatt has written an absolutely incredible investmentbook. He shares secrets that he has used succesfully in his investing career. His firm, Gotham Capital is one of the most succesful hedge firms in the world. The book is funny, entertaining, clever, but most importantly, it can really help you make money in the market. Read it now!
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