Recommended Reading for Buy Side Valuation

lib8023's picture
lib8023 - Certified Professional
Rank: Monkey | banana points 31

I'm trying to learn more about valuation and how it would be employed on the buy side.

I've looked some older posts, and noticed that Damodaran (On Valuation, The Little Book of Valuation, Investment Valuation), Rosenbaum (Investment Banking:...), and McKinsey are all common recommendations, but this might be more for the sell-side.

If you could only choose one for buy-side learning, which one would you choose?

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Comments (13)

Nov 21, 2017

Rosenbaum is for IB monkeys, hardly something you want to mention at HF or AM interviews. For general guides on valuation, I have read McKinsey, Damodaran, and Financial statement analysis and security valuation by Penman and found McKinsey and Penman to be more interesting ones.
But really, you should start trading (or investing).

    • 1
Nov 22, 2017

Do you have any suggestions on learning about valuation as you start investing? Other than my retirement, I have started to personally invest in order to become more "invested" in companies I find interesting. I feel comfortable spending time understanding the businesses and thinking about different future outcomes, but then start feeling a little lost when I need to contextualize with valuation.

It's funny, some analysts discount the importance of valuations, others say since the multiple is 50% of the share price, you should spend 50% of your time on it.

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Nov 22, 2017

to me it's all just...an assumption. it's just about...if I were to word it, "just right enough" where it's not about the exact price, but just a sense in range of how much upside or downside. If we were all good at valuation, we'd be retired millionaires. I think of values given to companies just as..."fake values" being given. The books you've wrote will give you the basis and foundation you need. I'd maybe look at some others not based on just valuation.

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Nov 22, 2017

Interesting...

Some others such as?

Nov 22, 2017

A few I loved.

-Margin of Safety by Klarman. I love Klarman but this is a good book. If you can't find it for cheap, that's fine.

2 that I love and recommend to a lot of people:

-The Most Important Thing by Marks. I loved it.

-7 Habits of Highly Effective People by I think Covey? Just read it. It's not related to valuations and finance but it's a good read.

I think another one I would say is recommended a lot is Einhorn's Fooling some of the People. Another good one is Dale's How to make friends and get people to like you?

There's a lot of books on finance. You have to decide whether you're looking for a textbook or something else. I will admit I've gotten most and enjoyed most of less financial jargon heavy books, where people really talk about their experiences and more of their history.

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Nov 22, 2017

yeah more and more I am starting to avoid the textbooks. I will probably run through the Damadoran lectures to reinforce fundamentals (that's a complex I have from studying philosophy), but I will definitely check out these books as well.

The textbooks tend to cover up that everything they are talking about is "expected". No formula is going to tell you how to expect something...I suppose you can switch the term expected with uncertainty.

Plus, all the analysts and PMs just roll their eyes at this stuff.

Appreciate it.

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Nov 22, 2017

Interested as well.

Do references from professors or previous internships suffice?

Nov 22, 2017

Quite easy. Beat your benchmark by whatever means necessary

Nov 22, 2017
bearing:

Quite easy. Beat your benchmark by whatever means necessary

Easier said huh......

Nov 22, 2017
bearing:

Quite easy. Beat your benchmark by whatever means necessary

Nov 22, 2017