#52 Stephen Penman: Accounting for Value

This Investing by the Books podcast episode features an interview with Stephen Penman, author of "Accounting for Value," a book advocating for a more accounting-focused approach to equity valuation. The discussion covers Penman's background, the book's core argument against traditional valuation models (like discounted cash flow), and his framework for separating speculation from known value using accounting data. Penman emphasizes the importance of understanding a company's financials to challenge market speculation and highlights residual income as a superior valuation metric to free cash flow. Listeners gain insights into a practical, accounting-driven investment strategy and learn to identify and challenge market speculation in equity valuation.