Best valuation books according to redditors

this podcast talks about exactly the topic you mentioned. Interview with two Harvard Business School profs, who even wrote a book on the topic.

REALLY Private Equity, with Royce Yudkoff and Rick Ruback – Invest Like the Best, EP.33


HBR Guide to Buying a Small Business

Forget Shkreli. The usual sources (besides in-house proprietary models) are:

(1) Macabacus. (see http://macabacus.com/learn).

(2) Rosenbaum and Pearl, Investment Banking - book and excel models

A bit more academic, but more in-depth:

(3) Penman's Financial Statement Analysis and Security Valuation (excellent book and he has a running example that guides you to create your own valuation spreadsheet)

(4) Dan Gode and Jim Ohlson models These guys are genuine experts from the academic side.

(5) Damodaran, as others have mentioned.

(6) McKinsey, Valuation. Some people like this one.

(7) Fernandez, Company Valuation Methods and Common Errors. Something of an acquired taste, but might be worth the read since he provides a list of the most common valuation errors. Gives analysts an awareness of how they can f**k up which can be useful.

• The Intelligent Investor - Benjamin Graham
  
  
• Security Analysis - Benjamin Graham
  
  
• The Interpretation of Financial Statements - Benjamin Graham
  
  
• Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports - Howard Schilit
  
  
• Applied Value Investing - Joseph Calandro
  
  
• Analysis for Financial Management - Robert Higgins
  
  
• Margin of Safety - Seth Klarman
  
  
• Common Stocks and Uncommon Profits and Other Writings - Philip Fisher
  
  
• One Up On Wall Street - Peter Lynch
  
  
• Beating The Street - Peter Lynch
  
  
• The Essays of Warren Buffett - Warren Buffett
  
  
• Snowball: Warren Buffett and The Business of Life - Alice Schroeder
  
  
• Buffett Beyond Value - Prem Jain
  
  
• Value Investing: From Graham to Buffett and Beyond - Bruce Greenwald
  
  
• You Can Be A Stock Market Genius - Joel Greenblatt
  
  
• The Little Book That Beats The Market - Joel Greenblatt
  
  
• The Big Secret for the Small Investor: A New Route to Long-Term Investment Success - Joel Greenblatt
  
  
• Reminiscences of a Stock Operator - Edwin Leferve
  
  
• Fooled By Randomness - Nassim Taleb
  
  
• The Black Swan - Nassim Taleb
  
  
• Poor Charlie's Almanack - Charlie Munger
  
  
• Rediscovered Benjamin Graham - Janet Lowe
  
  
• The Theory of Investment Value - John Burr Williams
  
  
• Seeking Wisdom: From Darwin to Munger - Peter Bevelin
  
  
• Security Analysis and Business Valuation on Wall Street - Jeffrey Hooke
  
  
• Value Investing: Tools and Techniques for Intelligent Investment - James Montier
  
  
• Investment Valuation: Tools and Techniques for Determining the Value of Any Asset - Aswath Damodaran
  
  
• The Dark Side of Valuation - Aswath Damodaran
  
  
• Financial Statements: A Step-by-Step Guide to Understanding and Creating Financial Reports - Thomas Ittelson
  
  
• Buyout - Rick Rickertsen
  
  
• Influence: The Psychology of Persuasion - Robert Cialdini
  
  
• Why Smart People Make Big Money Mistakes: Lessons from the New Science of Behavioral Economics - Gary Belsky
  
  
• The Warren Buffett Way - Robert Hagstrom
  
  
• The Most Important Thing - Howard Marks
  
  
• Competition Demystified - Bruce Greenwald
  
  
• Accounting For Value - Stephen Penman
  
  
• Distressed Debt Analysis - Stephen Moyer
  
  
• Bankruptcy Investing - Ben Branch
  
  
• The Vulture Investors - Hilary Rosenberg
  
  
• Creating Value Through Corporate Restructuring - Stuart Gilson
  
  
• Distress Investing - Martin J Whitman
  
  
• The Aggressive Conservative Investor - Martin J Whitman

I understand. So you're a number-crunching-guy :-)

Here is a reading tip for you:

https://www.amazon.com/Narrative-Numbers-Business-Columbia-Publishing/dp/0231180489/

This is wrong. Shareholder maximization as legal obligation is a myth. Lynn Stout who is an academic legal professor wrote about this. The corporation is under no legal obligation to do such a thing

http://www.amazon.com/Shareholder-Value-Myth-Shareholders-Corporations/dp/1605098132/ref=sr_1_cc_1?s=aps&ie=UTF8&qid=1421299436&sr=1-1-catcorr&keywords=Shareholder+myth

> whoaa why has my tutor been telling me to discount each expense per year then add them up then discount the total!

Fire your tutor, lol. That makes no sense. You come up with the FCF first then discount it. I mean, I guess you can do it his way but it's stupid. In a real model your going to have so many inputs you would need to discount. Read Valuation. Then you'll actually know why it works that way and it'll be much easier. It's a pretty big book so for this topic so you'll only need to read up to Chapter 6.

Tip: Read the whole thing. It'll do you good.

https://www.amazon.com/Valuation-Measuring-Managing-Companies-Finance/dp/111887370X/ref=pd_cp_14_1?_encoding=UTF8&psc=1&refRID=78812C9EYCT5SWFMY51W

i'm assuming this? link if any other readers are interested.
thanks!

Investment Banking: Valuation, Leveraged Buyouts, and Mergers and Acquisitions by Pearl and Rosenbaum.

Damodaran on Valuation: Security Analysis for Investment and Corporate Finance by Damodaran.


Both of these books provide solid walkthroughs of valuation.

If you want the Coles Notes of a simple DCF, here they are:

• Use previous financials to project revenues and expenditures going forward;
  
  
• From that, determine FCF;
  
  
• Determine WACC and use that to discount FCF into the future;
  
  
• If you don't want to forecast into infinity, determine a terminal value using DDM/GGM or some other metric (even BV);
  
  
• Add all discounted FCFs to terminal value to determine value of the business;
  
  
• Or divide by shares outstanding to determine intrinsic share value.
  
  Edit: Apparently Damodaran put that entire text online for free: http://raj.rajaditi.com/finance/corp/pages.stern.nyu.edu/_adamodar/New_Home_Page/valn2ed/book.htm

Many individual stocks drastically under-perform the broader market index (e.g. S&P500, Russell3000). Historically, most of the growth in the market index comes from a select minority of "elite" stocks.

Many stocks fail. A minority hit it big. This is a deadly combination for investors whose strategy is to pick individual stocks. In fact, many mutual funds that pick individual stocks will underperform the market index in the long run when net of fees.

As an investor, you should make a choice about your own strategy:

1. If the odds don't scare you and you want to be an elite stock picker like Buffett, then you have to learn the principles of valuing assets. Some people have had tremendous success with this type of strategy. Many have failed. A reasonable introduction is this book
   
2. Instead of individual stocks, you can fill your portfolio with low-fee market indices. If you get a fancy enough broker, you can diversify the portfolio with indices that represent many different types of loosely-related assets (e.g. stocks, bonds, commodities, currencies). That's a lot more exposure than picking a few tech stocks.
   Whatever you decide, best of luck!
   
   For more general financial advice: Don't risk money you can't afford to lose. Buffett's wealth is the result of many years of respectable, constant growth. Large losses are very difficult to recover from and can ruin years of previous growth. To get rich you have to find a reliable strategy that compounds!

Sounds like this would be a good start: http://www.amazon.com/Valuation-Measuring-Managing-Companies-Edition/dp/0470424656

Valuation by McKinsey & Company is a great reference.

Qualitative factors are always the most important part of valuing a company as its that understanding that should drive the numbers.

Aswath Damodaran did a great talk at Google a few years back that I think you'd enjoy -- https://www.youtube.com/watch?v=Z5chrxMuBoo -- and he also wrote a book called Narrative and Numbers: The Value of Stories in Business which is worth a read.

Models are just a way to express your thoughts. My best models have been around 5 lines long outlining how the key drivers translated into future earnings. My worst models have been many many pages.

As for valuations and how stocks trade, yes they're different things. A valuation should reflect what you think a company is worth, and if you buy it at that price you should get your discount rate as a return over the long-term provided all your assumptions prove to be correct.

How a stock acts is completely different. Any investor or trader should have a clear idea about whether their strategy is to predict the long-term value of a company and buy based on that, or whether it's to predict what other market participants will do which will drive prices in the short-term. Often in practice it's a combination of both even if people don't explicitly say that.

> companies ultimately exist to serve their owners (stockholders)

Do they? Says who? We as a society allow companies to have limited liability. Shouldn't we get a social benefit in return?

Even if your narrow view is true, are the practices in this article the best way, much less the only way, to serve shareholders? My clients are often large, institutional investors, with massive holdings in a wide range of companies, including Apple. I would wager that most of them disagree that the practices in this article are clearly in their best interest, especially in the long run.

For an argument against your view, see [this book] (https://www.amazon.com/Shareholder-Value-Myth-Shareholders-Corporations/dp/1605098132).

For a general Damodaran text, consider Investment Valuation

https://www.amazon.com/Investment-Valuation-Tools-Techniques-Determining/dp/111801152X

read more from Aswath Damodaran, he's one of the most highly regarded equity valuations experts. In addition, read the news from a reputable source (WSJ, FTs...) multiple times every day.

Be patient.

The article largely parrots Lynn Stout's mass-market book.

Professor Stout's view is not universally shared by lawyers or legal academics. In my experience of the legal academy and the bar, it's a small minority view, more in the nature of activism than revisionism. I still recommend the book, just because the reflex to oppose it requires checking one's rigor closer to the primary sources.

State legislatures are running long-overdue and very promising experiments in public benefit corporations. Many of those business forms are still too fresh and untested to recommend to clients, but the same was true of LLCs not so long ago.

There is certainly a lot of interest. Lay clients are asking about the structure. That and crowd funding :-)

Edit: Word choice

For $50 and a couple of dozen hours spent reading, you'll get an entire MBA's valuation education by reading Valuation: Measuring and Managing the Value of Companies from McKinsey.

I would read "a random walk down wall street" for a good understanding of basic theories behind investing (fundamental analysis vs technical, risk and portfolio management etc...).

Then diving into to the different schools of analysis, for fundamental analysis, I super highly recommend reading: McKinseys Book on Valuation ( http://www.amazon.com/Valuation-Measuring-Managing-Companies-Edition/dp/0470424656), you might need a quick primer on accounting and corporate accounting before jumping into that book though. Warren Buffet's Essays and books and the classic "The intelligent investor" are also good resources for insights.

For portfolio management, I would study basic modern portfolio theories
( http://en.m.wikipedia.org/wiki/Modern_portfolio_theory), and read books on portfolio management such as http://www.amazon.com/Pioneering-Portfolio-Management-Unconventional-Institutional/dp/0684864436.

But then to go even further, it will be more robust to read more about risk management and the shortfalls of such portfolio management models highlighted in the recent market crashes. "The Black Swan", "Fooled by Randomness", "Irrational Exuberance" are good books to read to more qualitatively understand risk and learn to protect yourself from it.

Valuation is like voodoo. According to the IRS, the fair market value is the most important, but in reality there are lots of factors. For example, what would the business sell for today if the owners agreed to stay on as regular full-time employees - That value might be zero if their cash flow is poor, but clearly the business is worth something (and they are not going to just give away equity based on poor income valuation)

http://en.wikipedia.org/wiki/Business_valuation

This Forbes article does a fair summation of the issues you are dealing with:

http://www.forbes.com/2009/09/23/small-business-valuation-entrepreneurs-finance-zwilling.html

I would probably start with asset and income valuation and then try to put a number on the existing owner non-asset goodwill defined as:

http://en.wikipedia.org/wiki/Goodwill_(accounting)

I would avoid, "valuation based on what the founders have already put in, i.e. a % of their day-job salaries and cash." Those are sunk costs. What I mean by that can be explained by analogy: Would you pay someone $30,000 for a rusted-out, broken down 1988 Ford Ranger because the owner put $22,000 of improvements into it over its lifetime?

The owners may feel it's worth $30,000 because of their efforts, but as I often think when I am browsing Craigslist and run across an extremely overpriced vehicle, "If there's not a couple gold bars that go along with it, I'm not paying that." The reality is that the owners are going to tend to over-value the company because of sunk costs, but you have to come to a valuation based on the current realities (future earning projections can be taken into account as well, but I would be conservative in those estimates.)

There are accountants who specialize in business valuation. I would definitely retain one to work for you and not for the company. Look for someone who is a CPA and a Certified Business Analyst or Certified Valuation Analyst or American Society of Appraisers member.

There is a book that was recommended to me (I haven't read it yet) called Valuation.

http://www.amazon.com/Valuation-Measuring-Managing-Companies-Edition/dp/0470424656/ref=cm_cr_pr_product_top

There is also a workbook:

http://www.amazon.com/Valuation-Workbook-Step---Step-Exercises/dp/0470424648/ref=sr_1_5?ie=UTF8&qid=1395756019&sr=8-5&keywords=valuation+measuring+and+managing+the+value+of+companies

Again, I haven't gotten around to these yet. I did notice that the first review of Valuation has a recommendation for a book: Business Valuation which that reviewer says is the best for reviewing small, private companies. The review:

http://www.amazon.com/Valuation-Measuring-Managing-Companies-Edition/product-reviews/0470424656/ref=sr_1_1_cm_cr_acr_txt?ie=UTF8&showViewpoints=1

The book:

http://www.amazon.com/gp/product/047037148X/ref=cm_cr_asin_lnk

Good Luck!

Not in way of argument, but it's very important that the ideators of the world understand the difference between ideation and investment.

Bill Gates is well known for giving start-ups the cash

There are investors out there that throw money at ideas purely based on the idea, and nothing else. But these are the exact type of people that are being mocked in this thread - I haven't met one, myself, after many years in the field. In truth, the amount of diligence that goes behind anything beyond simple market investment is tremendous. I would argue doing research on angel investment is a sticky path. If anyone with an idea who has dreams of starting a company really wants to find that dream investor, I recommend starting with one of these books on how acquisitions work. Then work your way to understanding early-class investment. At the end of the day, they're tremendously easier to understand, and give you a better learning curve into the grit that goes into determining which - of thousands of ideas - to invest in, and which not to. There are literally thousands, if not orders of magnitude more, ideas currently being tossed around to earn money. Investors, like Bill Gates, who want to turn their money into more money, do (or pay people to do) the grit work to ensure they pick the right ones.

In this way - developers are an investor. They invest time, not money, but in essence it's exactly the same, because they could easily spend that time working on a better investment.

Books:

• Valuation: Measuring and Managing the Value of Companies
  
• Mergers and Aquisitions: A Condensed Practitioner's Guide
  
  And maybe my favorite:
  
  
• How to Be an Angel Investor by Paul Graham
  
  Edit/Source: I manage and perform technical due diligence for startup acquisitions for a Fortune-500 company

This is a great book written by some Mckinsey guys.

http://www.amazon.co.uk/Valuation-Measuring-Managing-Companies-University/dp/0470424702/ref=pd_cp_b_0

I think it is a self-serving myth that US companies are required to only care about the $$. A very convincing and nearly entirely believed myth, but I think it's been debunked. Now don't get me wrong, that's probably all the shareholders care about and in the end the companies are setup to care about what they want...

This book covers it way better than I can:
https://www.amazon.com/Shareholder-Value-Myth-Shareholders-Corporations-ebook/dp/B007PIZ8IO/ref=sr_1_1?ie=UTF8&qid=1534453504&sr=8-1&keywords=lynn+stout

"So long as a board can claim its members honestly believe that what they're doing is best for `the corporation in the long run,' courts will not interfere with a disinterested board's decisions -- even decisions that reduce share price today."

This review of the book summarizes it well:
https://corpgov.law.harvard.edu/2012/06/26/the-shareholder-value-myth/

Aswath Damodaran is a great starting place for any new investor interesting in valuation methods.

His blog

One of this books, Investment Valutation

The DDM chapter from the above book

Basic .xls

Read HBR Guide to Buying a Small Business

It's very thorough and covers everything from valuation, to raising equity, how to split profits, etc.

In general, investors want to see a 25% return on their money for this kind of deal, maybe a little more in your case due to the turnaround nature of the deal.

Also, I echo the advice to draft pro formas-- what do the financials look like after your improvements and assuming everything goes as planned. Do the improvements yield a meaningful enough change?

Finally, the owner should be willing to finance a significant portion of the deal. It's very common in small business, but especially since you're looking at a much higher risk situation.

https://www.amazon.com/HBR-Guide-Buying-Small-Business/dp/1633692507/ref=sr_1_1?ie=UTF8&qid=1487885144&sr=8-1&keywords=buying+a+small+business

Frankly, if you are management material, your employer will probably send you to get an MBA (likely after you're already management). I suppose you could always do it on your own, if you want.

Either way, it's really easy and won't warrant special preparation prior to starting. If you're wanting to prepare for the job rather than school, you'll have to be more specific on where you want to improve. Management, as another poster mentioned, is an entirely different discipline with its own facets of challenge. It would be like asking what books you should read to prepare for engineering; if you want it all, it will be a very long list.

My contributions below are based on my own preferences, as they're the books I felt I got the most out of, but your priorities may be entirely different:

• Jim Collins, particularly "Built to Last" and "Good to Great"
  
• Value Drivers
  
• Leadership: Theory and Practice
  
• The Art of Strategy: A Game Theorist's Guide to Success in Business and Life
  
  I would also second the other recommendations of Peter Drucker (bit outdated but fundamentals are all there) and Carnegie (excellent book). There are other books with lots of great info but they tend to be course textbooks and are very, very dry reads. However, if you can get short primers on corporate accounting, operations, HR, etc. you would at least be familiar with the basics.
  
  Edit: forgot this one but it's an easy read. It's geared towards IT but provides some insights into other facets of management.
  
• Adventures of an IT Leader
  
  Edit2: forgot HBR!

This is very good if you are into valuation:

https://www.amazon.com/Investment-Valuation-Techniques-Determining-University/dp/1118130731/ref=sr_1_1?ie=UTF8&qid=1541756197&sr=8-1&keywords=Aswath+Damodaran

Learning to fill in one of these spreadsheets is pretty meaningless. There are so many adjustments to make in a DCF depending on each company and/or industry you should try to start from the bottom up. If you're a beginner and really want to learn how to do a full DCF I'd recommend getting one of the below books to start learning from scratch.

http://www.amazon.co.uk/Valuation-Measuring-Managing-Companies-Finance/dp/0470424656

or

http://www.amazon.co.uk/Investment-Valuation-Techniques-Determining-Finance/dp/1118130731

Is this the same one just newer? Would you recommend?

This? https://www.amazon.com/Valuation-Measuring-Managing-Value-Companies/dp/0470424656

Hello everyone!

I'm reading through the McKinsey "Valuation" (5th Edition) textbook (https://www.amazon.com/Valuation-Measuring-Managing-Value-Companies/dp/0470424656) and I've had some issues that I was hoping to get answered.

Specifically, in the second chapter, the authors discuss the so called value driver formula: Value =( NOPLAT_i * (1 - g/ROIC) )/WACC-g. Where:

g = constant growth rate of earnings.

ROIC = rate of return on incremental capital invested

NOPLAT_i is the operating profit after tax (before reinvestment) in period 1.

However, then they go on to show this diagram: https://imgur.com/R7umPno, which is a matrix depicting the value of companies for different ROIC, growth rate combination. I understand the *point* of this: when ROIC < WACC, growth destroys value, and vice versa. However, I'm having trouble replicating the specifics of the numbers they get:

In this situation, WACC = 9%, and the initial NOPLAT is $100. They model it for 15 years and then use 3% perpetuity growth formula for the terminal value. I have 2 questions.

1. I don't understand how they can say that the value of the company is $1100 when ROIC and growth are both 9%. The value driver formula would clearly give a value of 0 (I know it's only applicable in constant growth settings, but this assumption is met) because g/ROIC would = 1 when g = ROIC, and thus the numerator goes --> 0. This would also make sense because of the other formula they mention: Investment Rate = growth rate / ROIC. If growth rate = ROIC, then IR = 1 and you reinvest everything in order to get the growth you want.
   
2. Secondly, I've tried to model these scenarios out on my own in Excel not using any plug in formulas but just literally modeling the scenario out for 15 years with a perpetuity terminal value and I don't get anywhere close to the $1100 present value for the time when ROIC = WACC = 9%. The value ($1111.11) is only close for ROIC - 9%, Growth - 3% Anyone want to take a crack at it to help a guy out? Happy to share my spreadsheet
   
   Either way, I feel like I'm missing something really obvious. Help is appreciated :)

If this is basically a video version of this book, it's nothing more than an intro to finance course. Nothing here for anyone other than a newbie.

His text, however, is quite a bit more detailed and thus worth going through, although as I've said before, his infatuation with DCF is sometimes hard to overlook. But his section on calculating "fundamental" multiples is something I've only found in 2 other investment books/texts, so definitely worth it.

This is a complex subject. Here are a couple of books, though you might not need the 2nd one (I'm not sure what's involved in an education in Economics).

Valuation

How to Read a Financial Report

PDF Warning - The Investment Checklist

This is all good advice. In terms of structuring the deal, I'd agree that a 5 year buy-out makes sense.

Take a look at the HBR Guide to Buying a Small Business (http://amzn.to/2qoPMhn) for some good ideas on how to do this. It spends a lot of time talking about the sourcing process, but the second half of the book covers your situation nicely.

That's today's normal, but it wasn't always that way. And it probably shouldn't be now. Good book here.

STOP! The shareholder value myth is FALSE.

The shareholder value myth is a zombie that has taken dozens of shotgun blasts to the head, but refuses to die and needs to be put back into the ground from whence it came.

CEOs and boards act on behalf of shareholders and have some obligations, but not much more than any other employee has to their boss. Corporate chiefs are largely free to steer the business in the direction they want, so long as they are not committing blatant fraud and enriching themselves at the expense of shareholders. If shareholders don't like it, well, that's what at-will employment is for.

The myth of a legal obligation to maximize shareholder value arose as part of the financialization of the economy in the go-go, greed-is-good 80's. Ivy League business schools pushed this obligation so hard that it started to be taken as an absolute.

Here are some eye-opening resources on this topic:

Lynn Stout: The Shareholder Value Myth [book]

Lynn Stout article in the New York Times

I'm going to give you the pathway that I read that has me where I am today, its mostly going to steer you towards dollar cost averaging and passive management, but the easing of exposure to alternative strategies was invaluable and eventually brought me to value investing. Dollar cost averaging in low cost index funds is the training wheels of investing and should be the way every novice investor starts IMO.

1. The Wealthy Barber - this is the sesame street book on investing and everyone should read it when they're starting. It'll expose you to the ideas of dollar cost averaging, low fee index funds, and the importance of using TIME as your biggest asset in slow growing your net worth. Its like $6 and 100 pages, you can read it in afternoon. http://www.amazon.com/The-Wealthy-Barber-Updated-Edition/dp/0761513116
   
   
2. The Little Book Of Common Sense Investing - if you want to skip the previous book and go straight to this one that would make sense, they cover much of the same info but this one is written by John Bogle (founder of Vanguard) and very much pushes the idea of low cost indexed mutual funds as the only way the casual investor has a chance. If you read the wealthy barber, you'll be a little bored with this book, so take your pick. http://www.amazon.com/Little-Book-Common-Sense-Investing/dp/0470102101/ref=sr_1_1?s=books&ie=UTF8&qid=1425572242&sr=1-1&keywords=John+boggle
   
   
3. A Random Walk Down Wall Street - its been recommended several other times in the thread and I recommend it too, but not as a starter book, read one of the two books above first. The ideas presented in Random Walk are a bit more advanced and will begin to expose you to the ideas and methods of identifying risk and diversity in a portfolio, such as alpha, beta, mordern portfolio theory, and discounting. In the end the book is going to push the novice towards low cost passively managed index funds, as it should IMHO. Absolutely worth reading once you have built a small nest egg.
   
   At this point if you've taken a year or two or more to invest using what you learned in the above books you'll have a better idea of what you really want to start doing with you're money. Perhaps its value investing, and now it starts to get more technical.
   
   
4. The Little Book of Valuation - Good intro to valuing companies that begins getting into the technicalities of analyzing balance sheets. If you think this is the route you want to go then give it a read, but not until you've read the books above and cut your teeth for a year or two managing your money and exercising good decision making and patience with dollar cost averaging. http://www.amazon.com/Little-Book-Valuation-Company-Profit/dp/1118004779/ref=sr_1_1?s=books&ie=UTF8&qid=1425572657&sr=1-1&keywords=The+little+book+of+valuation
   
   
5. The Intelligent Investor - now you're really ready to dive into the details of a companies financials to determine its worth in 5-10 years. This book by Benjamin Graham (warren Buffet's mentor) is the go to book on value investing, and I take this review seriously: "“By far the best book on investing ever written.” (Warren Buffett)". Do NOT start here, you'll just be confused, bored and frustrated. http://www.amazon.com/Intelligent-Investor-Definitive-Investing-Essentials/dp/0060555661/ref=la_B000APZXBQ_1_1?s=books&ie=UTF8&qid=1425575056&sr=1-1
   
   By this point you'll no longer be an investment padawan and be well on your way to a master of the force. Do not be tempted by the dark side of day trading and penny stocks. Much fear there. There is no need for level 2 quotes with value investing because you're relying on your due dilligence from the previous years and quarters to take your portfolio higher, without worrying about the road bumps in the market today. You'll be able to happily live your life until the next quarter or two when its time to reevaluate and rebalance your portfolio.
   
   Good luck.

Valuation:Measuring and Managing the Value of Companies

This should do the trick: https://www.amazon.co.uk/Little-Book-Valuation-Company-Profits/dp/1118004779/ref=sr_1_2?ie=UTF8&qid=1478977766&sr=8-2&keywords=damodaran

You value the company and then you compare your value to the price.

Take a look at this book https://www.amazon.com/Messy-Marketplace-Selling-Business-Imperfect/dp/0998030007

I personally like this one the best. It has good examples of his valuations as well.

First, keep enough in your passive funds to keep you going even if you lose the rest. Pull out your SWR and that's it, no matter what. Then maybe keep another chunk passive that you only move to active after you've had some success with that.

For the active funds, it depends what you're interested in. If you want to contribute to society while making money, another option is angel investing. Look for small startups that need early funding, and have some potential for making a positive impact.

There are some books on Amazon that look decent; I've read part of this one and it sounds like a lot of work, but potentially rewarding.

But don't go into it lightly. It's easy to throw your money away.

Thanks! I will check it out for sure. I recently read "The Complete Guide to Real Estate Finance for Investment Properties" - But even that was a bit over my head at times - http://www.amazon.com/Complete-Estate-Finance-Investment-Properties/dp/0471647128

"It's beyond me how anything I've said implies that is my thinking."
"A P/E ratio does imply return as you said, but has no relationship to growth." Maybe I'm misunderstanding you but it sounded like you use P/E as a proxy to earnings yield without thinking about what a "fair multiple" is.
https://www.scribd.com/doc/79983013/UBS-Valuation-Multiples-Primer#from_embed

"You may want to check their financials - they're currently at 39.8% and i has steadily risen over the last 3 years"
I understand that, and what I was saying was that if you just run the numbers using their "price increases" and approximate average sale price per SKU, you'd see that the delta on gross margins over the past few years can't possibly be due to them increasing prices on the same SKUs because the delta is too low.

"What I heard was the SSSG was 2.5% not the 5% the street was anticipating"
Yes, and the entire point I was trying to make is that you need to understand what the stock price is implying, which is a big mistake that a lot of investors make (retail or institutional). Maybe I haven't communicated this well, but if you read this book (linked below), you'd see exactly what I meant.
https://www.amazon.ca/Value-Four-Cornerstones-Corporate-Finance/dp/0470424605

"Time will tell who is right."
Just keep in mind that using the stock price to verify your decision making process is essentially not separating type I vs type II error. The stock can work without the thesis being right.

I'll leave it at this; you decide how to take it.

https://www.amazon.com/Valuation-Measuring-Managing-Companies-Finance-ebook/dp/B0138M3B3O

Read books like this: http://www.amazon.com/Valuation-Measuring-Managing-Companies-Fourth/dp/0471702188
If you have access at your university, get the Vault Guide for Finance.
Join the investment Club.
Get on as many email listserves as you can regarding finance.

While it is but a part in the M&A process, the book "Valuation: Measuring and Managing the Value of Companies" by McKinsey is one of the bibles on Valuation.

Amazon link.

Yes, the PEG ratio is useless as are P/E, P/B, etc. if one does not know the implicit assumptions these quick-and-dirty valuation methods make. I recommend reading chapter four of this book by Damodaran.

Note: if you build a DCF model, it will imply a specific P/E, PEG, etc.

http://www.macabacus.com

http://www.amazon.com/Investment-Banking-Valuation-Leveraged-Acquisitions/dp/0470442204

http://www.amazon.com/Valuation-Measuring-Managing-Companies-Edition/dp/0470424656

And a little later down the road upon graduation: http://www.cfainstitute.org/programs/cfaprogram/Pages/index.aspx