The Schoolhouse Bell Rings! It's Fourth Dimension For Class!

As most teachers do, I grade fourth dimension inwards academic rather than inwards calendar years in addition to equally September dawns, it is New Year's flush for me in addition to a novel cast is laid to begin. In exactly nether a week, on September 7, 2016, I volition walk into a classroom in addition to confront to a roomful of students, non quite ready for summertime to end, in addition to start teaching, equally I conduct hold every yr since 1984. This semester, I volition move dorsum to pedagogy Valuation to MBAs at Stern, in addition to equally I conduct hold inwards semesters past, I invite you lot to bring together me on this journey, equally nosotros await at the mix of art, scientific discipline in addition to magic that makes valuation such a fascinating discipline.

Class Philosophy

I conduct hold ever believe that to instruct a cast well, you lot conduct hold to start amongst a floor in addition to that the cast is an extended serialization of the story. I also believe that to instruct well, you lot conduct hold to, at to the lowest degree over time, brand that floor your ain in addition to mold the cast to reverberate it. In fact, the valuation cast that I volition move pedagogy this Fall has its seeds inwards the real outset valuation cast that I taught inwards 1986, but the differences reverberate non alone how much the basis has changed since then, but also how my ain thinking on valuation has evolved. The cast remains a move inwards progress, where each fourth dimension I instruct it, I acquire something novel equally good equally recognize how much I conduct hold left to learn.

I could laissez passer on you lot an extended essay on what this cast is about, but I would repeating what I said at the start of the Fall 2015 semester inwards this post. In short, I said this cast is non an extended accounting cast (where you lot forecast entire fiscal statements for extended periods), or a modeling cast (where you lot move an Excel Ninja) or a theory cast (since at that topographic point is hence niggling of it inwards  valuation to get with). Instead, hither are the wide themes that underlie this class, all captured inwards the painting below:

If you lot respect this painting a niggling daunting, I did do a Google beak that encapsulated these themes into almost an hour-long session. 

In particular, this cast is less almost the tools in addition to techniques of valuation in addition to to a greater extent than almost developing a foundation that you lot tin role to construct your ain investment philosophy. I know that organized religious belief is a discussion that is seldom used in addition to oft viewed amongst suspicion past times many inwards the valuation community, but it is at the pump of this class, both inwards price of how you lot construct upward organized religious belief inwards your ain capacity to value assets in addition to businesses in addition to how you lot concord on to that organized religious belief when the marketplace position toll moves away from your value.  Since I all the same combat on both of these fronts, I cannot laissez passer on you lot a template for success but I volition move opened upward almost my ain insecurities both almost my ain valuations in addition to almost markets.

Class Structure

Since my objective inwards the cast is that past times the terminate of it, you lot should move able to attach a break to exactly almost whatsoever asset, I volition roam the spectrum. I volition start amongst the basics of intrinsic value, partly because it is where I am most comfortable in addition to partly because it provides me amongst ways of dealing amongst other approach. The mechanics of estimating discount rates, cash flows, increment in addition to terminal value are non exactly simple, but easily mechanized. It is the specifics that nosotros volition wrestle amongst inwards this class:

• On risk gratis rates, commonly the to the lowest degree troublesome in addition to to a greater extent than easily obtained input inwards valuation, nosotros volition beak almost why adventure gratis rates vary across currencies, what to do almost currencies that conduct hold negative adventure gratis rates in addition to whether normalizing adventure gratis rates (as many practitioners conduct hold taken to doing) is a proficient thought or a bad one.
• On risk premiums in addition to discount rates, nosotros volition wrestle amongst questions of what risks should in addition to should non move incorporated into discount rates in addition to the dissimilar methods of bringing them in. In the process, nosotros volition examine how best to approximate equity adventure premiums in addition to default spreads, in addition to why fifty-fifty if you lot don't similar betas or portfolio theory, you lot should should all the same move able to approximate discount rates in addition to do intrinsic valuation.  
• On cash flows, nosotros volition focus on why accounting inconsistencies (on dealing amongst R&D, leases in addition to other items) tin atomic number 82 to misstated earnings in addition to how to ready those inconsistencies, examine what should in addition to should non move included inwards reinvestment (capital expenditures in addition to working capital) in addition to what to do almost stock based compensation.
• On growth, nosotros volition start amongst the slow cases (where historical earnings increment is a proficient predictor of futurity growth) but chop-chop motion on to to a greater extent than hard cases (of companies inwards transition) in addition to to what some persuasion equally impossible cases (like estimating increment inwards a start-up)>
• On terminal value, the large break inwards every DCF,  that tin real chop-chop hijack otherwise well-done valuations, nosotros volition develop uncomplicated rules for keeping the break inwards banking concern represent in addition to seat to slumber many myths surrounding it.

We volition apply intrinsic valuation to value companies across the life cycle, inwards dissimilar sectors in addition to across dissimilar markets. We volition value modest in addition to large companies, somebody in addition to public, developed in addition to emerging in addition to hash out how to value motion-picture present franchises (like Star Wars), phenomena (Pokemon Go) in addition to sports teams. We volition beak almost why start ups tin in addition to should move valued inwards the human face of daunting dubiety in addition to how probabilistic tools (simulations in addition to determination trees) tin help.

About one-half agency through the class, nosotros volition plough our attending to pricing assets/businesses, where rather than construct upward to a value from a company's fundamentals, nosotros toll it, based on how the marketplace position is pricing similar companies. Put simply, nosotros volition shine a low-cal on the practise of using pricing multiples (PE, EV/EBITDA, EV/Sales) in addition to comparable companies non amongst the intent of improving how it is done. We volition also beak almost why, fifty-fifty when you lot are careful in addition to accept aid of the details, your pricing of a society tin move real dissimilar cast its value.

In the concluding segment of the class, nosotros volition stretch our valuation muscles past times talking almost how alternative pricing models tin sometime move used to approximate the additional value inwards a business, such equally undeveloped reserves for a natural resources society or expansion potential for a immature increment firm, in addition to sometimes to value equity inwards deeply distressed companies. We volition unopen past times looking at acquisition valuation, where proficient feel seems to move inwards brusk supply, in addition to how agreement value tin move critical to corporate managers.

Want to sit in?

If you lot are intrigued or interested, you lot are welcome to sit down inwards on the cast (online in addition to unofficially). While my immediate attending volition move reserved for the Stern MBAs who volition move registered inwards this class, you lot volition conduct hold access to all of the resources that they do, starting amongst the lectures but also extending to lecture notes, quizzes/exams in addition to fifty-fifty emails. The bad intelligence is that I volition move unable to degree your move or laissez passer on you lot a certificate of completion. The proficient intelligence is that the toll is right. There are 3 ways inwards which you lot tin bring together the class:

1. My website: The most comprehensive in addition to most updated middle of all things related to this cast at this link. You volition respect the webcasts, lecture notes, past times exams, reading in addition to fifty-fifty the emails I ship on this cast here.
2. iTunes U: Just equally I am non an Excel Ninja, my capacity to bargain amongst html is primitive in addition to my website's pattern reflects that lack of sophistication. If you lot prefer to a greater extent than polish, you lot tin endeavor the iTunes U app inwards the Apple app store. It is a gratis app that you lot tin download in addition to install on your Apple device. Once you lot conduct hold it installed, click on the add together course of report in addition to move into the enroll code FER-SFJ-AKA. Like magic, the cast should popular upward on your shelf. If you lot don't conduct hold an Apple device, you lot tin acquire to the course of report on your estimator using this link. If you lot conduct hold an Android device, you lot tin role a workaround past times downloading this app first. Like all things Apple, the laid upward is amazing in addition to slow to move with.
3. YouTube: The work amongst the outset 2 choices is that they presuppose that you lot don't conduct hold a broadband constraint, perchance a vociferation upward cyberspace connector or worse. My proposition is that you lot role the YouTube playlist that I conduct hold created for this class at this link. The dainty affair almost YouTube is that it adjusts the paradigm character to your connector speed. So, it should move inwards almost whatsoever setting.

Since I conduct hold made this offering for almost xx years now, predating the MOOC nail in addition to bust, I tin offering some suggestions. First, it is a lot of move to lookout 2 80-minute lectures a week, endeavor your paw out at working through actual valuations in addition to complete the cast inwards xv weeks, if you lot conduct hold other things going on inwards your life (and who does not?). My proposition is that you lot cutting yourself some slack in addition to accept to a greater extent than time, since the materials volition remain upward for at to the lowest degree a yr afterwards the cast ends. Second, watching a lecture online for almost an hr in addition to a one-half tin move painful in addition to for those of you lot who respect the hurting unbearable, I do conduct hold an alternative. Influenza A virus subtype H5N1 couplet of years ago, I created an online version of this class, shrinking each 80-minute session into 10-15 infinitesimal sessions in addition to this cast is also available on my website at this link, on iTunes U at this link in addition to on YouTube. Third, whichever version of the cast you lot accept volition stick to a greater extent than if you lot pick a society in addition to value it in addition to fifty-fifty more, if you lot proceed doing it. 

The End Game

I would dear to tell you lot that I alive a life of placidity in addition to that I am sharing for noble reasons, but that would non move true. I am sharing my cast for the most selfish of all reasons. I am a performer (and every instructor is) in addition to what performer does non wishing for a bigger audience? If I am going to ready in addition to deliver a class, would I non rather conduct hold 30 yard people lookout the cast than 3 hundred. If you lot acquire something of value from this class, in addition to you lot experience the urge to repay me, I volition brand the same proposition that I did concluding year. Learning is i of those rare resources that is never diminished past times sharing. So, delight overstep it on to someone else! See you lot inwards class!

Links

1. Entry Page for the Valuation Spring 2016 (on my website)
2. Webpage for the Valuation Spring 2016 cast webcasts (on my website)
3. iTunes U for the Valuation Spring 2016 class (Enroll code on device: FER-SFJ-AKA)
4. YouTube Playlist for the Valuation Spring 2016 class
5. Webpage for Valuation Online cast (short sessions)
6. iTunes U for the Valuation Online class (short sessions)
7. YouTube for the Valuation Online class (short sessions)