Episode Details

Valuing a stock - for many people it is the hardest part of investing. How do you put a specific dollar value on a stock?

Both of us at Equity Mates have found this the most difficult part of learning to invest. So in this episode we break down what we've learnt over the past 3 years of this podcast.

In this episode you will learn:

• The different types of value investors talk about: enterprise value, book value and market value
• The difference between relative valuation and absolute valuation
• Different methods of relative valuation - price-to-earnings, price-to-sales and price-to-book
• The theory about absolute valuation
• Three methods of absolute valuation we won't be discussing (but you're welcome to Google if interested)
• Discount cash flow (DCF) - what it means and what you need to know
• Reverse DCF - a twist on your discount cash flow
• The effect that changing your assumptions can have on your valuation (a.k.a why you need to take the price you get with a grain of salt)
• Roger Montgomery's valuation method in his book Value.Able

Resources Discussed:

• Equity Mates Reading List - Including Value.Able by Roger Montgomery
• GuruFocus Website

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Equity Mates Investing Podcast is a part of the Diamantina Media Network - the home of Australia's favourite podcasts. For more information, visit http://diamantina.com.au/

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