Here is a link for some more free books from Csinvesting. Thanks again John and the anonymous contributor.
How to Absorb Knowledge
This article gives you a technique that a study shows, will help you remember what you have just learned.
Future of Education?
This is an amazing article that could help kids, especially from poor families, gain a proper education. Rocketship Discovery Prep is a charter school who has been having some amazing results teaching kids so far how to become better in math and reading.
This is the kind of thing that we need more in this country. We need school vouchers and school choice for families, especially if they live in terrible neighborhoods, and we need to worry less about the teachers unions and politicians that are controlling education now.
Microsoft Sony merger?
This article speculates that Sony and Microsoft could be working on some kind of collaboration for gaming in the future. This is something I think could be beneficial for both of the companies in the upcoming console generation. Too bad it is most likely not true.
Gist of this article:
I\’m very skeptical when it comes to rumors from unreputable sources and the whole \”I know somebody who knows somebody,\” kind of thing. And yet I recently heard tidings that were intriguing, if somewhat open-ended. I feel I should report it on the off chance that it leads to something. Then you could say you heard it here first. You can help me make heads or tails of it, but I think the bottom line was: Microsoft and Sony are in talks together. Where that will lead, we do not know.
First I will say that this source has been reputable for us in the past. He let us know about the depth of the Nintendo Network and Nintendo\’s social/online plans months before E3. He told us about the Wii U\’s trademark issues for the letter U and we reported it one month before it became public knowledge. He told us about that he saw black casings for the Wii U back when everyone only had seen the white version. And he told at the same time about the Wii U\’s clickable analogue sticks. He also told us about a game that sounded close to the final reveal of NintendoLand.
Mini Review of Valuation: Measuring and Managing the Value of Companies and Biases
Let me first be up front with you about my bias against DCF (discounted cash flow) valuation, which is what this book overwhelmingly talks about.
There are several reasons why DCF valuation does not make sense to me from a practical perspective on a way to value companies:
1) If you go through all the work it takes to do a proper DCF valuation, but you are off by 1% on one important number, your valuation could be off by more than 10%. There are so many inputs in a DCF valuation that the margin for error seems astronomical to me.
2) Lets say you are very good at DCF valuations and get all of the numbers correct, you still have to forecast out 5-10 years in the valuation. If Warren Buffett, who is a certifiable genius, cannot forecast months or even a year in advance, why should I think that I can forecast out 5-10 years?
3) Lastly, why do you have to do something as complex and time consuming as DCF valuation when you could just do relative/multiple valuations and come to pretty much the same conclusions in a fraction of the time. Time you could be using to think about the how the company and its competitors operate, and the strategy the company should use going forward, or finding another company to evaluate.
I am interested to see what some other people think who might be keen on DCF valuations, feel free to write your thoughts or rebuttal.
On to the review
The first 200 pages, out of 860 plus, I read completely, learned some things, and was very excited for the rest of the book.
Part 2 on to the end of the book is unfortunately techniques and concepts I have learned in various other places such as Aswath Damodaran’s free online valuation course, Bruce Greenwald’s books, and other various books I have read.
The book is not bad by any means I just did not want to go over DCF valuation techniques again after having just finished up Damodaran’s class that was almost exclusively going over those same techniques.
Valuation is mainly a book that talks about how to do DCF valuation and how to master the techniques that it entails. Throwing in some strategy, and some things to look for like high ROIC. There was one major thing in the book that bothered me though while I scanned through the remaining 650 plus pages.
He talks about how markets are mostly efficient, except in rare cases, whose opportunities only last for a short time. If he thinks markets are mostly efficient, except in rare cases, which only last for a short time, why does he need to value companies at all, shouldn’t they already be properly valued?
Individually I would recommend:
Learning how to do DCF valuations: Aswath Damodaran’s free online valuation course. I took his free course on Coursekit, which is now Lore here. I learned an enormous amount about how to think about doing valuations and things I need to watch for that I could apply to relative valuation. Here is a different link to his free course on Academic Earth.
Learning why ROIC is important: Various books, some of which I list here.
Collectively I would recommend Valuation to people who are just starting to learn about valuation techniques, how to do them properly with a little bit of strategy thrown in, and/or people who want to learn DCF valuation specifically. Especially if you download the free book from Csinvesting’s site that I wrote about here.
Now it is time for me to get back to valuing and evaluating companies. My next post will be showing you some of the new valuation techniques I have been working on.
This is a fantastic article about the potential special dividend Vodafone might be getting from Verizon. The article talks about the relationship between the two companies, how big the dividend could be, whether it could become a regular thing, and whether there could be a possible Vodafone/Verizon merger or if Verizon could buy out Vodafone’s 45% stake in them.
What if Microsoft Bought Activision Blizzard?
This article talks about some scenarios that could possibly happen in the video game industry if Microsoft were to buy Activision Blizzard.
What I am doing now
I am currently reading Valuation: Measuring and Managing the Value of Companies, one of the free books that Csinvesting put on his site, so it will be a few more days until I will be putting up some more valuations.
I have also been learning and applying some of the different valuation techniques from the Manual of Ideas to some of the stocks I have already written about, and will post some of them after I finish reading Valuation.
I can’t wait to start diving into some more annual reports and finding another company to evaluate, as this book is so far kind of a let down. Valuation is a good book so far, about a quarter of the way through it, but a lot of the stuff I have already learned from Damodaran’s free valuation course, Bruce Greenwald’s books, and from various other books I have read. So far up to where I have read in the book, it is almost exclusively talking about how to do DCF valuations, which I don’t do, with a little bit of strategy mixed in, and how companies with high ROIC are better investments than lower ROIC companies.
I mention csinvesting.wordpress.com quite a bit on this site and for good reason. Not only does it have amazing analysis and teaches you how to think better about companies and investments. He offers through his free Value Vault, books, videos, lectures, articles, etc from some of the greatest investors in the world.
Today John put up on his site 32 books/writings on his site that got donated to him from an anonymous contributor, all of which can be downloaded for free.
Some of the included books and writings are investment classics such as The Intelligent Investor, Security Analysis: 1940 edition, and Margin of Safety.
The books are in the categories of: Business Strategy, Investment and analysis, Valuation, Accounting, and Economic history.
Thank you so much John and the anonymous contributor, I am now going to have to upgrade my Dropbox account here very soon.
The analysis and valuation series on Dole, Chiquita, Fresh Del Monte, and my conclusions, which is the finale in the series that just got published, is exactly how I am planning on going about my analysis in the future. I am light years ahead of where I was when I first started, but I am still light years from where I need to be. The main thing I need to keep working on is my ability to judge competitive advantages.
I am now going to be finishing up Competition Demystified, which will help me judge competitive advantages better, and I will be searching for my next company to study.