Free Financial models
Fear not, not all about excel spreadsheets and discounted cash flows! But, for those that have a hankering to really 'up-their-game' and invest like a professional, feel free to download and have a play around with the attached models. These included 3-financial statement forecasts, plus a discounted cash flow based valuation.
Top 10 investment books
A Short History of Financial Euphoria – John Kenneth Galbraith
A short history of financial Euphoria reviews the major speculative episodes of the last three centuries, from "Tulipomania" in 1636 to Black Monday in 1987 and numerous examples in between. The book illustrates the unbroken cycle of boom and bust which economies undergo, and demonstrates that money and intelligence are not necessarily linked.
Accounting for Growth - Terry Smith
Terry Smith provides a ruthless exposure of the accountancy practices which are used to give a falsely rosy picture of a company’s health, and bewilder the investing public.The author of this book argues that it is time for attention to refocus on balance sheet movement, and above all, cash.
The Blackswan - Nassim Nicholas Taleb
Nassim defines a black swan as a highly improbable and unpredictable event with a massive impact. The book details how we concentrate on things we already know and time and time again fail to take into consideration what we don’t know. We are, therefore, unable to truly estimate opportunities. Taleb explains everything we know about what we don’t know, and offers simple tricks for dealing with black swans and benefiting from them.
Antifragile - Nassim Nicholas Taleb
Just as human bones get stronger when subjected to stress and tension, many things in life benefit from stress, disorder, volatility, and turmoil. Taleb describes this as ‘antifragile’, and explains how to gain from disorder and chaos while being protected from fragilities and adverse events.
The House of Rothschild – Niall Ferguson
Niall Ferguson uncovers the secrets behind the legendary Rothschild banking dynasty, one of the most fascinating families of modern times. He reveals the family's vast political network, which gave it access to and influence over many of the greatest statesmen of the age.
The Liquidity Theory of Asset Prices – Gordon Pepper
The liquidity theory of asset prices explores the belief that at the core of liquidity there is a force which exerts individuals to effect a financial transaction when they would not otherwise do so. Understanding this force of compulsion is a key to understanding a financial market when it appears to be behaving irrationally and avoiding costly mistakes.
How the mighty fall and why some Companies never give in – Jim Collins
How do the mighty fall? Can decline be detected early and avoided? How far can a company fall before the path toward doom becomes inevitable and unshakable? How can companies reverse course? – In this book Jim Collins confronts these questions, providing helpful insights and advice.
Blue Ocean Strategy - Renée Mauborgne and W. Chan Kim
Written by two professors at INSEAD, Blue Ocean Strategy describes the market universe as being split by ‘blue oceans’ and ‘red oceans’. Red oceans are all the industries in existence today – the known market space. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. A blue ocean is an analogy to describe the wider, deeper potential to be found in unexplored market space.
The Greatest Trade - Gregory Zuckerburg
The Greatest Trade Ever is the story of how hedge fund manager John Paulson realised that the sub-prime housing bubble was going to burst, making $15 billion for his fund and more than $4 billion for himself in a single year. It's a tale of folly and wizardry, individual brilliance versus institutional stupidity.
Black Box Thinking – Matthew Syed
Written by Matthew Syed, the book is about how the single greatest obstacle to progress is failing to learn from ones mistakes. The book provides interesting examples into how often in practice this simple principle is neglected, and the avoidable adverse effects that it creates.
Others
Not included in the list as they are less directly related to investment philosophy and style, but other worthwhile reads include: ‘Crowd Funding’ by Modwenna Rees-Mogg, ‘Elon Musk’ by Ashley Vance, ‘Alibaba The House That Jack Ma Built’ by Duncan Clark, and ‘Steve Jobs’ by Walter Isaacson
Top 10 Investment quotes
Below are a couple of quotes that do well at capturing some key investment principles, insights and observations.
"The most contrarian thing of all is not to oppose the crowd but to think for yourself." — Peter Thiel
“In many ways, the stock market is like the weather in that if you don’t like the current conditions all you have to do is wait a while.” – Low Simpson
‘There are two times in a man's life when he should not speculate: when he can't afford it, and when he can.’ – Mark Twain
“Prudence is not avoiding danger, but calculating risk and acting decisively. Make mistakes of ambition and not mistakes of sloth.” – Niccolo Machiavelli
“Investors should purchase stocks like they purchase groceries, not like they purchase perfume.” – Benjamin Graham
‘Revenue is vanity, profit is sanity, but cash flow is king”
“The desire to perform all the time is usually a barrier to performing over time.” – Robert Olstein
“The stock market is a device for transferring money from the impatient to the patient.” – Warren Buffett
"If you don't study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards." – Peter Lynch
‘One of the funny things about the stock market is that every time one man buys, another sells, and both think they are astute.’ –William Feather
Free Financial models
Fear not, not all about excel spreadsheets and discounted cash flows! But, for those that have a hankering to really 'up-their-game' and invest like a professional, feel free to download and have a play around with the attached models. These included 3-financial statement forecasts, plus a discounted cash flow based valuation.
Free Financial models
Fear not, not all about excel spreadsheets and discounted cash flows! But, for those that have a hankering to really 'up-their-game' and invest like a professional, feel free to download and have a play around with the attached models. These included 3-financial statement forecasts, plus a discounted cash flow based valuation.
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Who is the target reader of ‘The Company Valuation Playbook’The book is relevant to anyone that wants to value a company and its shares. This may, for instance, be to form an investment decision or to provide investment advice. It was written to help others avoid the frustration the author, Charles Sunnucks, faced when trying to get easily understandable answers on this topic. The book covers both public and private market equity valuation, plus fleshes out how to identify potential targets and avoid behavioural biases. Understanding what drives a company’s value is a fascinating journey and will likely entirely re-shape how you look at a company.
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What is the focus of the book?The Company Valuation Playbook does not focus on fast trading or new-fangled theories. Rather, it introduces you to the simple industry-standard tools used by professionals globally to value companies and their shares. These tools are relevant to all companies, and they range in complexity from those requiring only a pen, paper and calculator right through to the development of a comprehensive Excel discounted cash flow output. While some concepts may appear complicated at first, you only need some basic maths knowledge and a bit of common sense to work through them. As Warren Buffett eloquently put it, “Investing success doesn’t correlate with IQ after you’re above a score of 25. Once you have ordinary intelligence, then what you need is the temperament to control urges that get others into trouble.”
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Do I need to have prior financial experience to read this book?No prior experience required. The book makes no assumptions about your financial literacy and takes a step-by-step explanation approach to each topic. This includes detailing key accounting standards, and how to interpret financial statements.
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Does ‘The Company Valuation Playbook’ follow the CFA syllabus?The author of The Company Valuation Playbook, Charles Sunnucks, took and passed all of the CFA exams, so the content is certainly influenced by the CFA curriculum. The book however focuses on equity valuation, while the CFA exams also cover debt and derivatives in detail. A further difference is that the book is far more focused on being a practical guide, while the exams are largely ‘taught-to-test’. For those considering or taking the CFA, the book will nonetheless be highly helpful, breaking down complex topics with examples and diagrams.
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Is the book relevant for those studying finance or undertaking an MBA?Absolutely, and indeed a number of courses globally are already using the book within the curriculum. The book is also used by some financial service firms as a training self-training guide for new recruits.
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Does the book cover ESG (environmental, social and governance) considerations?"Yes, and indeed while there are many who treat this as a separate discipline, the author is of the belief that ESG risks should be fully incorporated into any thorough fundamental assessment of a company’s worth. Increasingly the externalities – the costs that companies had historically imposed on their physical and social environment – are now increasingly being internalised in response to changes in policy and consumer expectations. Out of sight, is therefore no longer out of mind.