I’m thinking about deepening my skills in equity valuation after the June exam (which I hope I’ll pass)
I will read those books: 1 chapter per workday
Investment Banking - Joshua Rosenbaum (I’ve read that it is much more practical than Damodaran) with one day to the textbook and another day to the workbook.
McKinsey on Valuation - The same thing, one day reading, and the next one doing practice exams.
I want your thoughts on those books and if I’d need to read some corporate finance before digging deeper in Valuation or the CFA level 1 curriculum is enough? I’d really want to learn some Montecarlo techniques and this kind of stuff that CFA barely touches, but I don’t think the ROI of reading a thousand pages book for that is good (For corporate finance I’m thinking about Damodaran or Ross, Westerfield, and Jaffe)
My background: Graduating from a shi**y college and working as Corporate Finance consultant, dreaming one day to be a buy-side analyst earning over USD100k per year (guys, that in Brazil is the one percent.)
I really don’t know how much CFA curriculum goes deep on equity valuation subject, I do believe there are some gaps in linking theory and practice in level 1 curriculum, don’t get me wrong, it’s a big theory war chest, however it lacks some real life examples and applications, you need to figure out on your own when and how to use each subject or linking all the curriculum with one activity (in this case equity valuation).
No, we were in a bubble, today recession is plummeting property prices after almost 10 years of pumping, but they are still high. You are better putting your money in government inflation-adjusted bonds than buying a house and paying your rent with the interest. (and you still can get the principal adjusted for inflation at maturity). So buying anything here is dumb.
I’d married two years ago and my wife friends were inquiring: “Why do you live in a rented place? Why do you married without your own house? That seems irresponsible and house is always a good investment” DOOM WORDS
Stronlgy recommend both books. Start with Rosenbaum. Read it cover to cover w/o taking notes first. Then read it again but take detailed notes. Do all the problems in the Workbook and do flashcards when you get something wrong. Then jump to the models. Go through every single cell pressing F2, then Esc on the completed models and reference the book for what you don’t get. Try to value a manufacturing or other simple company using the templates and compare your work with research reports (no cheating here). Then try to value a different company starting from a blank spreadsheet -here’s your 'final exam". That should take you 2 - 3 months if you work full time. Push as if you were prepping for the CFA. Once you master Rosenbaum, take on McKinsey with a similar approach.
You’ll learn five times more than what you did with level 1.
That’s a great advice! Thank you. Do you think that I should read any Corporate Finance book before or was Level 1 enough?
I was thinking about throwing Damodaran: “Investment Valuation” as the last book but it would become a lot of overlapping material, so I’m thinking about Beninga: “Financial Modelling”. Probably it gives more marketable skills like “Mastered financial modeling in excel using advanced techniques and VBA” seems better on resumé than: “I really really really know how to perform a DCF”
My two cents is that two books is already too much if you’re serious about mastering valuation (which at a fundamental shop is the absolute make-or-brake differentiator). There are no “advanced techniches” in financial modeling and VBA is seldomly used (I’m on the sell side, so I talk from that stand point). What you’re really looking for is to be able to look at a business and be able to assess value in a reasonable amount of time with reasonable accuracy. There’s only one way to get there: valuing businesses. Rosenbaum gives you the tools you need to achieve that. Once you’re there you can get fancy with more conceptual books and perhaps even some code if that’s what you want.
