Summary of Aswath Damodaran's The Little Book of Valuation

Excerpt From Summary of Aswath Damodaran's The Little Book of Valuation



#1



Investors must try to value whatever they are buying before actually buying it, since paying more than it's worth is not permitted.



#2



The two valuation approaches are intrinsic and relative. In intrinsic valuation, we start with a simple premise: the intrinsic value of an asset is determined by the cash flows you expect it to generate over its lifetime and how uncertain you are about these cash flows. In relative valuation, we compare the asset to similar assets.