Sunday, March 20, 2011

You Can Be A Stock Market Genius: Chapter 8

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

In this final chapter of the book, Greenblatt brings up some final points that are essential to being a successful investor. First, investors must enjoy not just positive results, but also the journey and challenge associated with finding undervalued securities. If you don't enjoy investing, a passive investment approach is probably more suitable.

Temperament is also important. If you're the type to sell your investments in a market panic, this type of investing is not for you. You must be patient and more confident in your own skills as an investor than in those of Mr. Market.

Greenblatt also notes a special characteristic about the investment situations he has described in the book. Many of them will not trade with the market, because they are special situations. As such, Greenblatt argues that even if the market falls or stays flat over a long period of time (e.g. as they did from the late 1960's to the early 1980's), investors using these strategies should still do well.

1 comment:

Stock Market Lesson said...

The average long-term experience in investing is never surprising, but the short term experience is always surprising. We now know to focus not on rate of return, but on the informed management of risk.

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