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You Can Be a Stock Market Genius
You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits

1999

Framework

by

Joel Greenblatt

Framework book that explains how individual value investors can uncover mispriced opportunities by focusing on overlooked or misunderstood special situations. Greenblatt covers spin-offs, mergers, bankruptcies, restructurings, recapitalizations, warrants, LEAPS, options, and more. Each concept is illustrated through detailed case studies showing how he and other investors applied these strategies to generate market beating returns.

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Jermaine's Notes
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June 2023

The case studies were gold—they really helped me understand each concept. This book is a roadmap for finding areas where individual investors can have an edge over larger players. The section on warrants and LEAPS reminded me of Ed Thorp and how he ran his hedge funds. It also complements Greenblatt’s other book, The Little Book That Still Beats the Market. Read the 1999 paperback edition.

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Framework-based value investing book that explains how to earn above-average returns by evaluating publicly traded companies. Joel Greenblatt’s strategy centers on understanding two things: how cheap a stock is at a given time, which is measured by calculating its earnings yield, and how efficient a company is at generating cash, which is measured by calculating return on capital. Written in plain language, it’s accessible to any beginner investor.
Unexpected nugget – Greenblatt uses the higher of 6% or the 10-year Treasury yield as his discount rate. He never goes below 6%. His Magic Formula, which ranks companies by return on capital and earnings yield, was insightful. The appendix includes solid detail on how each metric is calculated. This is the second edition (first published in 2005) and incorporates post-financial crisis updates through 2009.
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