4min chapter

We Study Billionaires - The Investor’s Podcast Network cover image

TIP515: The Little Book of Valuation by Aswath Damodaran

We Study Billionaires - The Investor’s Podcast Network

CHAPTER

The Truth About Valuation

Zazwoth points out that there are dozens of valuation models but only two approaches – intrinsic valuation and relative valuation. Intrinsic valuation is based on the cash flows you expect an asset to generate over its life, while relative valuation looks at market prices of similar assets. Both methods can be used as tools whether it be the intrinsic value method or the relative value method. You should expect to be wrong in your valuations from time to time and success comes from being wrong less often than everyone else.

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