Değerleme İçin Küçük Kitap

by Aswath Damodaran, Ergun Unutmaz (Translator)

"Damodaran'ın Değerleme İçin Küçük Kitap'ı hakkında 'küçük' olan hiçbir şey yoktur. Tüm işletme değerlemelerinin dayanağını oluşturan ve kendisinin yüzlerce sayfalık klasiklerinde anlatılan çeşitli fikirler bütünü, aynı özen, açıklık, keskinlik ve akıl seviyesinde buradadır." - Anant K. Sundaram, Profesör, Tuck İşletme Fakültesi, Darmouth Koleji

"Değerleme İçin Küçük Kitap öğrencilerime ve arkadaşlarıma tavsiye edeceğim harika bir kitaptır. Bu kitap, güçlü bir teori ve iyi uygulamaların etkileyici bir sentezidir. Yeni başlayanlar için tamamıyla uygundur. Aynı zamanda finans uzmanlarının profesyonel kütüphanesine yapılan önemli bir katkıdır. Tereddütsüz sahip olun." - Pablo Fernandez, Finans Profesörü, IESE İşletme Fakültesi, İspanya

"Damodaran'ın hızlı okunan kitabı, gerek kurumsal gerekse de çok yönlü bireysel yatırımcılar için değerli açılımlar sunmaktadır. Damodaran, 'değer yaratan etkenleri'; 'içsel' (gelir yaklaşımı) ve 'göreceli' (piyasa yaklaşımı) analiz sınırlarında, farklı hisse senetleri için geniş bir kategoride tanımlamaktadır. Damodaran ayrıca bakılacak en önemli faktörleri ve her bir kategori için bunların değerlemede nasıl ele alınacağını da göstermektedir." - Shannon Pratt, Başkan ve İcra Kurulu Başkanı, Shannon Pratt Valuations

Genres: Finance, Business, Economics, Nonfiction, Money, Personal Finance, Self Help

272 pages, Paperback

First published March 21, 2011

About the author

Aswath Damodaran is a Professor of Finance at the Stern School of Business at New York University (Kerschner Family Chair in Finance Education). He is well known as the author of several widely used academic and practitioner texts on Valuation, Corporate Finance and Investment Management; as well as a provider of comprehensive data for valuation purposes.

Reviews

[Jiliac · Rating 5 out of 5]

What an awesome book! Hypothesis: you are already a convinced "value investor". Damodaran argues a little in favor of this approach, but not much. This book is not an introduction to the subject. Graham, "The Intelligent Investor", would be a better starting point. The *goal* of this book: give you all the tool to determine a value for any good. While Damodaran pays lip service to relative valuation, the book really is about Discounted Cash Flow valuation (DCF). The books teaches you how to set the three core inputs of DCF: *cash flow, growth and risk*.

This is a technical book. The math are not advanced, just middle school level, but you have to be willing to spend the time reading annual/quaterly reports, understand the company and do all the adjustment needed in different cases. If you are not willing to take the time it takes to do proper valuation, just go the safe way and invests in ETFs/index. In his book, Graham warns multiple times against this. There is no "intermediary": either you go the very simple route, 5min per month, or you invest a significant amount of time, like 15h per week. (Not even sure 15h is enough). It takes a while.

If you want to get into valuation, and you are willing to take the time to do it, then this book is for you! I found it so perfect. Knowing close to nothing at the start, it provided all I needed to learn how to value stocks. I recommend also looking at all the content Damodaran is providing on his website. He gives so many concrete examples. The book is structured in three parts. First, accounting and valuation fundamental tools. Then in the second part, look at the four stages of growth of companies. In the final part, it deals with special kind of companies: financials, cyclical, and the ones with many intangibles. Probably, most returns are made with this kind of companies.

[Said · Rating 2 out of 5]

من چیزی نفهمیدم ار این کتاب
ولی حسم میگه اگه دانشی از قبل در مورد ارزشگذاری داشتم کتاب خوبی بود، به هر حال این کتاب برای من که مبانی مسائل مالی را بلد نیستم، خوب نبود

[Jeremy Reeves · Rating 4 out of 5]

Good stuff for more advanced investors. A little too advanced for me which made it hard to read, but that's how you grow :)

[Nazmus Sadat · Rating 3 out of 5]

Already read it thrice but still didn’t understand half of it ^^". Have to read it a couple more times 😨.

[Ted · Rating 3 out of 5]

The Little Books series purports to distill complex concepts in to layman’s terms. So, by the time I got to p. 208 and Damodaran brings up calculating the amortizable life of research assets in biotech firms, I realized why this book misses the mark.

The is graduate level valuation without the benefit of practice exercises or a professor to bounce questions off of. The information in the book is fantastic, no doubt. But I’ve been investing for 23 years and I cannot begin to grasp some of the concepts explained here. And since this is not a didactic text, it will remain impenetrable.

This would be a five-star read if he removed 20% of the valuation concerns and replaced them with more case studies illustrating the novice and intermediate valuation concerns.

This is, after all, the Little Book of Valuation.

[Vikash Anand · Rating 5 out of 5]

The Little Book of Valuation by Aswath Damodaran gives comprehensive overview of factors that needs to be taken into account for valuation of a company while investing. The book gives immense value in terms of understanding valuation of a company.

Value investing is the discipline of buying securities at significant discount from their current values and holding them until more of their values is realized. Valuing a company/business is the most important aspect of investing. It’s a daunting task. The complexities/variables involved in business are enormous. While precision is a good measure of process in mathematics or physics, it is poor measure of quality in valuation. It's better to be vaguely right then precisely wrong while valuing a company.

There are far many uncertainties involved in valuation. Macroeconomic factors, regulations, interest rate, competition, innovation these things cannot be predicted with accuracy. Even if one can accurately predict macroeconomic factors, there are far too many other factors/variables involved. Therefore, its aptly said that success in investing comes not from being right but from being wrong less often than everyone else.

Understanding valuation is critical to be an informed and successful investor instead of being a speculator focusing merely on price fluctuations. Basically there are two approaches for valuation i.e. Intrinsic and relative. In intrinsic valuation, the value of an asset is determined by the cash flows that one expects to generate over its life and how uncertain one feel about the cash flows. Assets with high and stable cash flows should be more valuable than assets with low and volatile cash flows. In relative valuation assets are valued by looking at how the market prices similar assets. It’s like while determining what to pay for a house, one looks at what similar houses in the neighborhood sold for. With a stock it means comparing its prices to similar stocks in its peer group. Both the approaches i.e. intrinsic as well as relative valuation plays a critical role in picking a sound stocks.

Valuing growth companies requires a different approach as compared to valuing a mature company with substantial market size. Both scale and competition conspires to lower growth rates quickly at even the most promising growth companies. Various valuation matrices can be used i.e. Book value, Earnings Price Ratio, Price to Book Value, Price Earnings Growth ratio, Return on Invested Capital to understand valuation of a company. These figures give sense about the quantitative aspect of valuing a business, whereas qualitative aspects of valuing a business i.e. quality of the management are much difficult to assess. The quality of the management is also critical as the management directly controls the company not the shareholders.

Also one needs to be aware of cognitive biases in the market. With professional analysts, there are institutional factors that add to substantial bias. Equity research analyst issue more buy than sell recommendations. It’s important to do background research on the company to information sources rather than opinion sources. One should spend more time looking at a company’s financial statements than reading equity research reports about the company.

Psychological studies have shown that a loss hurts twice as much as a gain of the same amount makes us happy as people gets hurt losing money much more than they enjoy making money. It leads to panic sales of selling low because investors sell in fear that the stock market will fall more. But for a value investor who is aware of such psychological factors will use it to buy value stocks at bargain price/ extremely cheap price. Therefore, it's important to understand this loss aversion theory as well as the prospect theory.

It is also important to understand the difference between volatility and risk. Volatility is price fluctuations whereas risk is business fluctuations. By focusing on keeping the risk minimal, one can find investment that have low or even no risk and offer extremely positive returns. Volatility is a friend of the value investors, understanding of risk and volatility will lead to better investing decision.

It's important to understand the book value, liquidation value, intrinsic value etc. Intrinsic value is different from book value. The change in the book value in one year or over a period of time tells how much the intrinsic value of the business has changed. Return on investment capital is also extremely important to factor in a business that manages to compound its capital at a high return will definitely do well over a long period of time. The margin of safety in terms of both price as well as business is also extremely important.

The Little Book of Valuation by Aswath Damodaran is an insightful book, very much recommended for anyone learning investing.

[Martin Helgeby · Rating 5 out of 5]

I see a few reviews commenting on level of difficulty in reading this book so I’ll add my $0.02. For whom is it suitable?

I personally read this book to serve as both a refresher and primer in the subject: having taken various bachelor’s level courses in finance some 10 years ago as part of my degree, without having spent any of my subsequent professional life working specifically in valuation; and preparing to read the subject as part of an MBA this autumn. For others with a similar background or motivation this book could serve as a gentle refresher/primer, cheap and cheerful, almost tabloid in its presentation (I mean that in the best way)!

I imagine the same might also be the case for hobby investors who regularly read finance blogs/material without necessarily having the educational or professional background, and/or others who have at least some knowledge of financial concepts. However, for someone looking for a very first introduction, I’d perhaps recommend starting with the basics (some theory on financial accounting, metrics/ratios, and general mathematical knowledge i.e. how and why one discounts the time value of future cash flows) in order to better benefit from reading this book later on.

I’d absolutely recommend this to others in the financial industry looking for a quick reference or to catch up with the subject of valuation.

[Ridzwan · Rating 1 out of 5]

Perhaps because it was trying to be a "little book" this title by Damodaran failed to elaborate on topics that needed them the most. Important fundamental concepts such a relative valuation metrics, and measurements of volatility, are being glanced over quickly in a very rudimentary manner. Examples and illustrations are also far and few between, Readers looking for a more comprehensive discussion on valuation techniques will fare better reading them on a financial wiki page.

[Indra · Rating 4 out of 5]

A great resource and an enjoyable read for non-finance folks and anyone interested in investments. The author makes complex concepts into easily understandable short paragraphs, while giving concrete examples and comparisons between different approaches.

[Alex · Rating 1 out of 5]

Aswath is clearly a very credible investor and smart - some of his video's are really good. This book however was very disappointing, and really does not do him justice.

[Ronny Blankenberg · Rating 2 out of 5]

This one is tough to grade. On the one hand, I learned a lot from the process of reading this book. On the other hand, I have severe issues with a lot of it's content. Let me explain.

I learned a lot from the process of reading this book, because it made evident and deepened further my understanding of the method of investing advocated by value investors, in perticular Buffett and Graham. Having their principles fresh in mind from recently read books, it was easy to spot some of the suggestions touted by Damodaran as unsound.

A shining example is that he seem to accept relative valation as a method deriving a valuation for a share, inspite of such a "valuation" beeing, in the end, totally dependent on market sentiment. I suppose if you accept the premise that markeds are fully efficient, this should blow past as acceptable as well. If you however belive, like me, that markets are not efficient one hundret per cent of the time, you will either: A) take issue with how relative valuation is prescribed in the book (in fairness to Damodaran, he does, in the last chapter of the book, admit that relativ valuation can answer only wheter the company is "cheap or expensive, given how the market are pricing other companies just like this one", but that is little to late after touting it as a metod of valuation through the book), or B) infer your purchase prices from a relative valuation and risk beeing one of the people standing when the music stops after a overheated marked/a bubble (imagine basing your investment decision in a tech. company circa 1999 on a realtive valuation).

I also take issue with presenting valuation of young growth companies based on significantly increasing the number of variables and necessary prerequisites and substitions by way if genereal inferrals as sound. In my view, a more sound approach would be to say that such a company does not realiably lend itself to valuation, as we have no way of predicting its cashflows within reasonable probabilities that the number derived from it is usable in any sense for any one (much less stake your hard-earned cash on the output you derive from it). Buffett says to stay within you should only value stocks within your circle of competence - stick to what you know, and know what you do not know. It would thus be sound to steer clear of valuing a company by way of a number of variables in need of prerequisites which are so high that the probability of the number deriving being correct when future becomes historie is fast-approching zero.

I also had my blood pressure somewhat elevated by how Damodaran seemingly condone adjusting the valuation (growth ratios or ROIC) based on the (!)chance(!) that a company may change management and that the new management augment the operations so as to acheive higher returns on invested capital (page 139) or that the company might sometime in the future venture into new markets or relase new, not-yet-thought-of products (par to adjusting Apples valuation based on the growth spurt made possible of the later relase of the iPhone cirka 1995) (page 100-101). Condoning to entertain such augmentations of the valuation despite it being no more probable than the company's headquarters being annihilated by an earthquake has a hard time standing up to the tests of logic.

In manners such as the above, it is my view that Damodaran througout the book either skeews towards illuminating possible positives without addressing equally probable negatives to the valuations. Lastly, but possibly more important, is that he through the book gives you an method for valuation of any company by way of adding variables, prerequisites and by-way-of-substitutions to get the requested output valuation. However, he does not help you destinguish between situations where a company lend itself to valuations where the output can be trusted even to be probable. That destinction you have to make for yourself.

If I were to rate the book on the learning experience reading it have given me, it would be five stars. On the content side, there definitly are positives. Part one - the valuation give a concise and comprehensible overview of the philosophy behing valuation and a brief overview of the necessary prerequisite knowledge. Damodaran's writing on the discounted cash flow model and it's working is also really good. So are his learnings on financial optimisation (page 132) for reducing weighted avrage cost of capital and his chapters on valuing financial service companies and cyclicals.

The good parts are really good and the bad parts could have been left out. The synthesis of my review: The little book of valuation is not small enough.

PS: I truly love Damodaran's online lectures and the way he selflessly shares his teachings and materials online. Any bias going into reading this book was in his favor.

[Frederic · Rating 3 out of 5]

The title is a misnomer, as the author spends no time on stock picking. He does break down several valuation methods and suggests which might be most relevant in various situations as companies grow, mature and decline.

There is not much discussion of earnings or cash flow based multiples and their application to various sectors, as he prefers the bottom up, discounted cash flow models that comprise the bulk of the book. These are more rigorous but are also rife with assumptions.

Despite the title, this is not a book for people with no financial background. The writing is a bit dry, but it's still probably useful as a reference for formulas, etc.

I have found other investment books more absorbing, like Ben Graham's The Intelligent Investor, anything by Joel Greenblatt, whose writing is much more entertaining, or the Peter Lynch books from the late 1980s.

[Adam Tenasaputra · Rating 1 out of 5]

Good for those that are unfamiliar with finance. A broad review to those that done graduate level work.

It’s a combination of elementary statistics and bare basic finance.

Only good chapter might be invisible value(ation)

[Leandro Melendez · Rating 4 out of 5]

Una lectura medio rapida pero que no podria considerar puramente como lectura... Pues en realidad trae muchas formulas y tips de valuacion en los diferentes tipos de compañias y metodos de calculo.

Cubre casi todo aunque en realidad me confundio un poco en algunas secciones. Definitivo no es un libro de una sola lectura sino de consulta, hacer ejercicios, mucha practica y muchos ejercicios.

Lo marco como terminado pero creo que lo voy a desgastar en consulta y re consulta.

No es el mejor libro para enseñar valuaciones definitivamente pues requiere mucho conocimiento previo.

Aun asi lo recomiendo infinitamente a los apasionados de la inversion.

[Helen · Rating 3 out of 5]

This is a great book for the experienced or advanced stock market investor, but not so great for the beginner or casual investor. It's too technical and reads like an economics textbook or a math book with complex equations and formulas.

I rated this book 3 stars, not because it's an average book, but because it focuses specifically on valuation (as the title states), which is not what I'm interested in at this time. However, it's a great reference book and I'm sure I'll be returning to it in the future.

[Lucian Daia · Rating 5 out of 5]

Prof. Damodaran's books on valuation are always a pleasure to read. Although his valuation exercises are extremely rigorous and quite diverse in terms of approaches and hypotheses, he managed to distill them into this book and Dark Side a Valuation (focusing on the more complex scenarios).

[Spire Metro · Rating 4 out of 5]

Really interesting read. It gets into the numbers and formulas as well as the thought processes around valuation. To the point and loved it.

[Paramveer · Rating 5 out of 5]

A good read for understanding basic principles of valuation of a company.

Crisp, clear, easy to understand, limited usage of jargons, covering all the scenarios and different types of companies. Just basic knowledge of finance required to understand, very practical cases explained.

[Alvaro Cuesta · Rating 5 out of 5]

A really nice introduction to the world of company valuations. The book is full of practical examples and Mr. Damodaran successfully conveys with enthusiasm the usefulness of this practice. He explains valuation concepts in a very simplistic yet brilliant manner, a good synthesis and starting point for anybody interested in this area of finance.

[Russ Lemley · Rating 5 out of 5]

This has to be the best valuation book I have ever read. It provides very simple yet powerful lessons about how to value companies and their stocks. I recommend this to anyone interested in learning how to develop your toolkit for analyzing and investing in companies.

[brother_rebus · Rating 5 out of 5]

Great quick book for gaining unique insights on dual valuation methods. After reading, plan to use as a reference book for replacing given examples with your looks & picks.

[Adhiraj · Rating 4 out of 5]

I read this book at a really interesting time. In a market that has supposedly forgotten the word ‘valuations’, I think this book is a good read as a reminder for investors like me in a market where it seems that the majority of the crowd has come to a consensus that ‘valuations don’t matter. So, here is a refreshing little book on the art of valuation. Aswath Damodaran has written this book with utmost simplicity such that it's extremely easy to understand.
Valuations can be a tricky area for investors. Rarely do investors come to a consensus regarding the valuation of a stock. And that is what makes the market. Different perspectives and expectations often fuel different narratives regarding a business or a stock. So, Valuations are often estimations that often change with time as the future is many times uncertain and unpredictable.
Valuations are also extremely prone to incentives and biases. One thing I have learned about valuations over the years is that investors can easily manufacture any well-sounding explanation to justify whether low or extremely high valuations.
My two most important insights from this book are:
1. The most important factors in the valuation of a firm are its ability to generate cash flows in the future and the uncertainty regarding those cash flows. Firms with the ability to generate higher cash flows in the future will be valued more highly, as is the nature of the market to value growth companies at higher multiples.
The firms can be intrinsically or relatively.
The most common method to assess the intrinsic value of an asset is Discounted Cash flow (DCF) analysis where the sum of all cash flows in the lifetime of the company are estimated and summed up and discounted back to the present day.
Relative valuations are influenced by the way similar assets are priced.
So, this book briefly explains how the cost of capital, growth rates, and cash flows can be estimated to calculate the intrinsic value of a firm. And all these calculations are subject to assumptions. So, they are great tools to use but one should be aware of their shortcomings and limitations.

2. The second takeaway from the book is that one should not use the same hammer to value different types of companies.
This is a very common error most investors make. This book analyses companies in different sectors and different stages of their lifecycle. It’s probably not wise to value a loss-making company that is yet to exploit its market potential the same way one would analyze a multi-billion-dollar giant. There is no one size that fits all. So, growth companies should be subject to different valuation metrics than mature and stable firms. As Charlie Munger states, ‘there should be different checklists for different type of companies.
Similarly, it's also not wise to compare the valuations of companies in different industries with similar valuation metrics. For example, A financial services company is exposed to more risk than an IT/Internet company. Banks can blow upon an entire century of profits in a quarter due to bad lending practices which are difficult to replicate in most other types of businesses. All Businesses are exposed to their own unique industry-specific risk, thus they should be valued accordingly. And this is what makes investing extremely exciting as every investment opportunity can be viewed from multiple perspectives.
This book wonderfully gives a brief overview and some good perspectives over different ways to view a cyclical, growth, mature, declining, loss-making, leveraged, and commodity firms.
I could have written a lot more, but the book has done a good job of explaining most concepts.
As it can be made out from the title, this is a little book that doesn’t take much of your time. It is a great crash course for someone who wants to understand the art of valuations and factors that influence valuations. But everything written should probably be not taken too literally as investing and the business world is far more uncertain than most people imagine and the points stated are just good perspectives to have at your disposal.

[Charles Reed · Rating 4 out of 5]

76%

This was a fascinating read. Learning about Valuations are usually what people do for Investments, and that is debt to asset ratios for Equity.

I like it, but I was doing was, uh, I actually talking about him using The debt itself as an asset. That's why that isn't an asset. You know, the inability to pay back debt can be an asset because it's all about risk management. And that's why you can make a lot of money if you learn to use debt properly. It's like, Okay, take this loan here, use it for something, and then instead of paying it back right away, Go put it someplace else. If for that time period and go make a lot more money. And that's one of my Maiden strategies that I found to be really Successful. So far, it's all about, uh, risk management, though. And that's why you can be very effective with this at turning Like thousands of dollars to 10 to hundreds of thousands of dollars. Or you can be very effective at turning a hundred thousand dollars to like ten thousand dollars. Unfortunately as well.

[James Ford · Rating 2 out of 5]

This book really only covers the very basics of valuation and does so in a bit more of a technical way, not sure who the intended audience would be. I was disappointed mainly because I am a big fan of Damodaran's and very much enjoy his other writings, especially his blog posts. Did not take away much from this book unfortunately.

Notes:

1 - "companion variables": key variable that dominates when it comes to explaining each multiple.
2 - intangible assets are often expensed rather than capitalized.
3 - proper ESOP impact on PE value lies roughly half way between undiluted and fully diluted PE (options should to be valued separately using BSM or using market value).
4 - firms with intangible assets tend to be big users of equity options as compensation which will affect equity value per share.

[Khaled Alsayed · Rating 1 out of 5]

As a beginner it literally felt like I was reading a book in a language I don’t speak. I gave up after reading the first three chapters as I just couldn’t understand anything. I’ve been learning stuff from YouTube and I already read 1 book on investing( 7 secrets to investing like warren buffet)
So it’s not like I have 0 knowledge on investing in the stock market. I feel like this book was way to complicated for me and I’ll probably give it another shot after reading a few books and maybe it’ll be easier to understand then. Beginners stay away!

[Effendy Yahaya · Rating 5 out of 5]

i love it! for all the varies in valuation method, it emphasis on what you are really keen on to assess for certain organization. Key valuation on whether intrinsic of relative value bring more towards assessing risk that affects value. Adjusted PE ratios and ammortized R&D must be taken seriously towards proper weight in both valuation and demand by market value, highly to be considered. "Look at the past, and the think about the future!" Thanks Aswath!

[Bozhidar · Rating 4 out of 5]

An approachable and short introduction to the complex subject of valuations. Nothing more, nothing less. While some formulas might be a bit intimidating you don't really need to know much about mathematics or finance to benefit from this book. For me the most useful topics in the book were the different valuation models for the different types of businesses - e.g. young, growth and mature companies, financials, cyclicals/commodity producers, etc.

[Iliya Polihronov · Rating 5 out of 5]

Aswath Damodaran does a good job of introducing the different concepts of valuation and describes well and with examples how to use these different valuation methods in practice. Might be a somewhat overwhelming if that's the first thing you read on valuation, as this little book is packed with information.

[Kaustubh Chaharia · Rating 2 out of 5]

The book has a few interesting points on business valuations here and there in bits and pieces. Author has used a lot of formulas to be used while valuing a company - something that put me off. If I have to pick one chapter to read from this book, it'd be the last one - valuation of firms with intangible assets.

[Keshav Jangra · Rating 3 out of 5]

An overview into the concept of valuing companies. This book is a good first read for someone trying to understand the basics of valuation. While the examples in the book are only hypothetical, they help explain the basic things to keep in mind while attempting valuations. This clarifies that valuations aren't an exact science but estimates and could vary from person to person.