Recommended Reading: The Ascent of Money
Just finished reading “The Ascent of Money: A Financial History of the World
The book was relatively easy reading on what could have been a dry subject. I took away a couple of thoughts about business valuation.
1. No matter how one slices and dices historical public market data, it still represents a sample size of one. The returns for a given company, year, or other strata are not independent variables. Rather, they represent the results of a sequence of events.
2. The financial markets may be a mirror reflecting the best of humanity as well as our blemishes. Similarly, a business valuation may be a mirror that reflects the way a business looks to the market at a particular point in time.
The 24-hour news cycle and details of financial analysis make it easy to lose perspective. A book like this is a great way to step back and see the forest for the trees.
