on 15 November 2009
This is a pretty good book on the valuation of companies. At some places, it gets too tedious. For example, the author shows how to arrive at the correct discount rate used to discount cash flows to the present. It would take investors hours to calculate it, and in the end, it doesn't really matter that much. When valuating companies, I personally do not spend too much time trying to pinpoint the exact discount rate. I use 10%, and then change it to 9% and 11% to see what the valuation results are. Then, I compare them to the trading price. It is not important or even possible to value anything with 100% precision. What is important is to get an idea of whether something is undervalued. Overall, I learned quite a bit from this book.
- Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market