Saturday, March 19, 2011

You Can Be A Stock Market Genius: Chapter 7

Value investor Joel Greenblatt takes the reader through a number of categories of investing examples where market inefficiencies exist. This book has numerous case studies, giving the investor a chance to learn and then apply the lessons to current and future market opportunities

Now that Greenblatt has provided readers with the types of opportunities in which they should invest, he now discusses how investors can find these opportunities. The first and most important step is to read the business news. Greenblatt recommends the Wall Street Journal in particular, but notes that all business sections of any newspaper are useful. While millions of other investors are doing the same, they are not interested in the same things as readers of this book.

Greenblatt also recommends that readers subscribe to a few newsletters. There are newsletters that cater to turn-arounds and special situations. Furthermore, investors can check out the holdings of various value managers by reading their prospectuses and checking out their filings. These starting points will provide a plethora of ideas; but investors must investigate and only focus on the best ones that they can understand.

On that note, Greenblatt goes on to discuss how investors can fully investigate ideas once they have identified them. He discusses some of the important SEC filings that investors must go through. He also discusses the difference between net income and cash flow and when investors should use one and not the other.

1 comment:

Stock market lesson said...

There is lot of information andInformation is great and certainly understandable. Please carry on to write more on this subject..