Brian Feroldi Profile picture
May 5, 2021 โ€ข 13 tweets โ€ข 5 min read โ€ข Read on X
10 Highly Underrated Books About Money & Investing

A ๐Ÿงต
1/ 100 Baggers by @chriswmayer

This book studies the best-performing stocks of all time and gives lessons for how to find the next ones
2/ Beyond Wealth by Alexander Green

A collection of life lessons by Alexander Green, who is a former money manager that gave up HUGE money to live a better life

This is the book that I re-read the most
3/ The Education of Millionaires by Michael Ellsberg

This is like "Rich Dad, Poor Dad", but with FAR more details. A superb read with tons of practical advice.
4/ The Emotionally Intelligent Investor by Ravee Mehta

If your behavior is wrong, what you invest in won't matter.

Ravee breaks down how to make sure you get your investing behavior right.
5/ Investing for Growth By Terry Smith

A collection of Terry Smith's letter to investors. Terry is a wonderful investor with a terrific track record. He buys high quality companies and then does nothing.
6/ The Joys of Compounding by @Gautam__Baid

A book about "value investing" that also touches on self-learning and business wisdom.
7/ The Millionaire Fastlane by MJ Demarco

A book filled with practical advice for how to speed up wealth creation
8/ The One Page Financial Plan by @behaviorgap

I love it when books take a complicated subject and makes it simple. This book does just that with money & financial planning.
9/ Only The Best Will Do by Peter Seilern

I'd never heard of Seilern before, but he also invests for high-quality growth like Terry Smith. This book is all about why you should find & invest in the best businesses you can and ignore everything else.
10/ Warren Buffett & The Interpretation Of Financial Statements by Mary Buffett

Want to learn accounting? This book is fantastic! It goes line by line through financial statements and shows you how Warren Buffett thinks of them
If you want a list of other great books that are more mainstream, here are the top 15 books that changed my financial life:

If you are curious about the book that I'm writing, all the details that have been released thus far can be found here:

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More from @BrianFeroldi

Aug 16
WACC Cheat Sheet

What is the Weighted Average Cost of Capital?

Here's a quick primer: Image
WACC is the average after-tax expense of capital for a company from all of its sources.

This includes common stock, preferred stock, bonds, and other hybrid debt & equity instruments.

WACC is the mean rate a company pays to fund its operations. Image
WACC = [(E/V) x Re] + [(D/V) x Rd x (1 - Tc)]

E = Market value of the firmโ€™s equity
D = Market value of the firmโ€™s debt
V = E + D
Re = Cost of equity
Rd = Cost of debt
Tc = Corporate tax rate

WACC is a sum of the weighting of each capital source Image
Read 6 tweets
Jul 3
If you pick stocks, you MUST learn how to analyze a cash flow statement.

Here's how to do it in less than 2 minutes: Image
The Cash Flow Statement shows how cash moves in and out of a company over a period of time.

Its purpose is to track cash movement through a business. Image
The Cash Flow Statement uses CASH accounting.

This method only records transactions when money goes in or out of an account.

This differs from ACCRUAL accounting, the accounting method used on the Income Statement and Balance Sheet. Image
Read 10 tweets
Jul 2
How to analyze a Balance Sheet in less than 2 minutes: Image
The balance sheet is one of the three major financial statements.

It shows a companyโ€™s:
โ–ช๏ธAssets: What it owns
โ–ช๏ธLiabilities: What it owes
โ–ช๏ธShareholders Equity: It's net worth

At a fixed point in time Balance Sheet
That โ€œat a point in timeโ€ part is key!

A balance sheet is a SNAPSHOT of a companyโ€™s net worth.

It is measured at the end of a quarter/year. Image
Read 11 tweets
Jun 21
Warren Buffett's favorite way to measure profit isn't Net Income or Free Cash Flow.

It's Owner's Earnings.

What is it? How to does it work?

In this thread, I'll walk you through the calculation: Image
Imagine that you're opening a coffee shop.

You spend $100k on furniture & fixtures that will last 10 years.
You spend $60k on coffee equipment that will last 3 years.

Here are your total annual operating costs: Image
You make $1 million in revenue, so here's your income statement:

Revenue: $1,000k
Expenses: $450k
Pre-tax income: $550k
Taxes: $110k
Net Income: $440K

If you started with $105K in cash, how much do you have now?
Read 11 tweets
Jun 17
If you invest, you MUST understand accounting.

This thread will walk you through the Income Statements, visually: Image
An Income Statement is a *record* of how much money a business made (or lost) during a particular period of time -- eg, a quarter or a year.

The formula is: Revenues - Costs = Profits

Here's an example using Starbucks's income statement: Image
The Income Statements also contain a few other numbers that interest investors, including:

Gross Profits, Gross Margin, EBITDA, Operating Profits, Operating Margin, Earnings Per Share, etc. Image
Read 12 tweets
May 31
Tangible vs Intangible Assets.

What's the difference?

Here's everything you need to know: Image
They confused me until I discovered an easy way to distinguish them:

๐—ง๐—ฎ๐—ป๐—ด๐—ถ๐—ฏ๐—น๐—ฒ ๐—”๐˜€๐˜€๐—ฒ๐˜๐˜€ ๐—–๐—ฎ๐—ป ๐—•๐—ฒ ๐—ง๐—ผ๐˜‚๐—ฐ๐—ต๐—ฒ๐—ฑ

๐—œ๐—ป๐˜๐—ฎ๐—ป๐—ด๐—ถ๐—ฏ๐—น๐—ฒ ๐—”๐˜€๐˜€๐—ฒ๐˜๐˜€ ๐—–๐—ฎ๐—ป'๐˜ Image
Another major difference.

- Tangible assets are depreciated

- Intangible assets are amortized Image
Read 7 tweets

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