You buy financial assets for the cash flows you expect to gain. The price of a stock cannot be justified by assuming there will be other investors around who will pay a higher price in the future. That is the equivalent of playing an expensive game of musical chairs. As a prudent investor, you need to value the investment you are considering before buying it.
Valuation is at the heart of any investment decision, whether that decision is to buy, sell, or hold. In The Little Book of Valuation, financial expert Aswath Damodaran explains valuation techniques in everyday language so that even those new to investing can understand. Using this important resource, you can make better investment decisions when reviewing stock research reports and engaging in independent efforts to value and select stocks for your portfolio.
Page by page, Damodaran distills the fundamentals of valuation, without glossing over or ignoring key concepts, and develops models that you can easily understand and implement. He also makes the case that the two popular, and often divergent, approaches (intrinsic and relative) to valuation can be used in tandem. Damodaran discusses how both of these approaches can significantly improve your odds by helping you select stocks that are undervalued not only on an intrinsic level but also on a relative basis.
Once you become familiar with the techniques outlined in this book, you will be able to value a company with confidence. In addition, The Little Book of Valuation:
Includes illustrative case studies and examples that will help develop your valuation skills
Puts you in a better position to determine which investments are on track to add real value to your portfolio
Offers valuable valuation insights from one of the foremost experts in this field
Written with the individual investor in mind, this reliable guide will not only allow you to value a company quickly, but will also help you make sense of valuations done by others or found in comprehensive equity research reports.
Praise for The Little Book of Valuation
"There is nothing 'little' about Damodaran's The Little Book of Valuation.The whole gamut of ideas that form the basis for all business valuationscovered in his many multi-hundred page classicsare all here, with the same rigor, clarity, pointedness, and wit."Professor Anant K. Sundaram
Tuck School of Business, Dartmouth College "The Little Book of Valuation is a great book that I will recommend to my students and friends. This book is an impressive synthesis of sound theory and best practice. It is completely accessible to the novice. It is also an important addition to the professional library of the finance specialist. Acquire it without hesitation."Pablo Fernandez, Professor of Finance IESE Business School, Spain "Damodaran's fast read book offers valuable insights for both institutional and sophisticated individual investors. Within the confines of 'intrinsic' (income approach) and 'relative' (market approach) analysis, he identifies the 'value drivers' in several broad categories of stocks and the most important factors to look for, and how to treat them in valuation for each category."Shannon PrattChairman and CEO, Shannon Pratt Valuations
I got turned on to the little book series with "The Little Book that Builds Wealth" that is still probably my favorite book, but this one was also an enjoyable, and quick... Read morePublished 4 months ago by Valerie C. Lynn
Received the specified product within the specified time-frame within the specified condition. Enjoyed the book. The text was required reading for schoolPublished 6 months ago by Anthony Pellegrino
Great book. I do realize that we need all this information to get the valuations of companies and I hope it can be used on a regular basisPublished 7 months ago by NICK
Weak. If you've read his other books, this is very much watered down. If you are a fan of Damodaran then SKIP this book. If you have no idea who Damodaran is...skip this book. Read morePublished 9 months ago by Alan
As I first year finance student I thought this would be a fairly straightforward book-I was wrong. The book appears to throw together aspects from many different levels of finance. Read morePublished 9 months ago by Taylor
I own four kindle books by Mr Damodaran.
I also until recently had hard cover one that I gave away to a colleague. Read more
Almost finished with this book. It covers all of the basic methods for equity valuation, i.e., fair value price/share. Also covers valuation cases that are hard to evaluate. Read morePublished 11 months ago by Robert E. Ryan
Excellent read! I would recommend the book to any student who wants a quick and dirty look at valuation.
Professor Damodaran is one of the best in the field.