What's So Special About Special Situation Investing?

Special situation investing is something that can excite both investors and traders who want to make a quick buck in the market by incredibly improving the odds. What exactly is this strategy and how does one put it into practice to make handsome profits? Read on as Yogesh Supekar throws some light on this exciting topic

- Yogesh Supekar

The equity market is full of investors with conflicting views and is made up of investors who adopt unique approaches to create wealth for themselves. On the one hand you will see the disciplined kind who will invest regularly, every month if not every week. On the other hand you will also notice that some investors simply buy and forget – they don’t even think of selling their shares in the markets. Ironically, we will find winners and losers in both these categories! We have value investors who want to buy undervalued stocks and then we have growth investors and momentum investors who don’t mind buying overvalued stocks if there is a promise of high underlying growth.

Such a huge variety of investors participating in the markets on a daily basis is what makes the market one of the most enriching wealth-creating exercises. Indeed, the equity markets are accommodative in nature and provide a level playing field for each one of us to explore opportunities to make money in quick time – quicker than most other asset classes. In this scenario, special situation investing is one strategy that brings to the fore the best of growth investing, value investing, market timing speculating on future prospects – all at once. We say so because the trick is to bet on undervalued stocks that can show rapid growth because some corporate action is likely to trigger market reaction.