Novices determined to go against the Wall Street grain would be well advised to stick with David Dreman (Contrarian Investment Strategy, The New Contrarian Investment Strategy)--whose buy-cheap/sell-dear approach stockbroker Grace recommends. But beyond out-of-favor issues with price/earnings ratios below market norms (plus generous dividend yields, strong balance sheets, and healthy operating rates); Grace suggests ""bottom fishing"" for recovery candidates that are in the red--or reorganization. The warning against ""plunging into unfamiliar waters without a life jacket"" is as nothing next to the cited rewards; and the sketchy counsel obscures the fact that the Phoenix Approach (i.e., up from the ashes) is a demanding, time-consuming proposition. With that qualification, Grace does offer a reliable checklist for evaluating the prospects of companies in distress--by assessing presumptive earnings power, book value (which he advises discounting up to 50 percent), hidden liabilities (unfunded pension obligations, litigation), competition (especially from foreign sources), survival history (of the industry as well as the corporation), return on equity, and lesser benchmarks. In the case of Chapter 11 concerns, he reviews the pecking order of securities in corporate capital structures, from common stock up through mortgage bonds (which may prove bargains, thanks to liens on real property and/or equipment with salvage value). Grace also provides a welter of lists (current as of mid-1983)--including junk bonds, issues with high and low P/E ratios, companies that have reported deficits for a 12-month span. The danger, again, is that neophytes might try to bypass the arduous Phoenix selection process. A slick text with a timely hook--but, Dreman apart, Justin Heatter (The Small Investor's Guide to Large Profits in the Stock Market, p. 285) and Lowell Miller (The Perfect Investment, p. 1.200) are more prudent and practical choices for any but experts.