You Can Be a Stock Market Genius: 8 key ideas
The core ideas of You Can Be a Stock Market Genius, each in under a minute, written in our own words. Want the full depth? Get the book.
- IDEA 1 OF 8
Look where others don't
Greenblatt argues that ordinary investors can find opportunities in special situations that big institutions often ignore.
These unusual corporate events can create mispriced shares. Size can be a disadvantage for big funds.
- IDEA 2 OF 8
Spin-offs can be overlooked
Greenblatt explains that when companies split off a division into a new company, many shareholders sell the new shares without studying them.
This can push prices below value. Forced selling creates bargains.
- IDEA 3 OF 8
Restructurings create chances
Greenblatt describes companies selling businesses or reorganising to improve focus.
Such changes can reveal value that was hidden inside a complex company. Simpler companies left behind are easier to value.
- IDEA 4 OF 8
Bankruptcy can hide bargains
Greenblatt discusses companies emerging from bankruptcy, which many investors avoid.
He explains that new shares in such companies sometimes trade cheaply. Fear and confusion keep many ordinary buyers well away.
- IDEA 5 OF 8
Mergers produce odd securities
Greenblatt describes unusual securities issued during mergers and acquisitions.
Because they are unfamiliar, they may be ignored and mispriced. Unfamiliar things often get ignored by most investors and analysts alike.
- IDEA 6 OF 8
Recapitalisations change the picture
Greenblatt explains how companies sometimes borrow heavily to return cash to shareholders.
The remaining shares can become more valuable if the business is strong. Risk rises too, so judgement is needed.
- IDEA 7 OF 8
Rights offerings can be unusual
Greenblatt describes rights offerings, in which shareholders can buy new shares at a set price.
He explains why these can create opportunities for careful investors. Each case needs careful, separate study.
- IDEA 8 OF 8
Research beats rumours
Greenblatt stresses doing thorough homework on each situation instead of following tips.
He presents his methods as his experience, not guaranteed results. The book is witty, practical and refreshingly frank.
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