I just wanted to share a great book on real estate evaluation which was shared in the ERE forums (I forget which thread). The principles transfer fairly well to stock analysis as well. This is perhaps one of the few books on investing which isn’t dumped down and thus doesn’t assume that addition and multiplication is now beyond the average person; this one won’t hide the underlying machinery by sending you to a website with some annoying javascript “calculators”.

I would say, if you don’t have an understanding of the math of the various ratios and percentages pertaining to basic financial statement analysis, you probably shouldn’t invest in individual stocks or real estate for that matter. Okay, let me rephrase that: Understanding the ratios and the thinking behind them will allow you to avoid a great many mistakes as an investor compared to the “I like their burgers”-school of investing.

A good proxy for the value of a book is the difference between the used price and the new price. The smaller the spread, the more sustainable value the book provides. A book with a large spread is not likely to have any enduring merit. This book has a small spread.

If you already know enough financial analysis to calculate internal rate of returns and you know the difference between return on equity and return on assets, this book will be a breeze to read though. It may serve as a fast refresher but you probably won’t learn anything significant. If not, this book is a great one to start with.