I finally decided to get serious. After years of nibbling around the edges, I guess it was time to step up and take a big bite.
This summer bought Aswath Damodaran’s “The Little Book of Valuation” with the intent of reading it cover to cover in a month.
I bloody devoured it in one intense week!
I have a rough idea of how he thinks about things. There are many things about his intellectual posture that I really dig. For example:
- all valuations are wrong, but some are useful
- any business, regardless of where it is in its life cycle, can potentially be valued
- don’t run away from uncertainty, try to quantify it in different ways
- a bias towards intrinsic valuation, not because it is more accurate, but because it forces you to explicitly specify your assumptions.
- the importance of overlaying a narrative on the numbers.
Numbers without narrative = Modeling, Narrative without numbers = Storytelling, Numbers + Narrative= Investing
Over the next few months, I am going to try to practice some lessons I learned from his book on companies that have somehow sneaked into my portfolio.