Investment Mental Math

The spreadsheet will not always be open when you need to make an investment decision.

A portfolio manager asks what a position will become after adding capital. An investment committee challenges a target IRR. A company misses EBITDA and you need to understand what that means for equity value. A bond spread moves and you need to translate it into actual risk.

In those moments, calculation speed matters. But calculation alone is not enough.

Investment Mental Math is a practical guide to developing the numerical fluency and investment judgment required to think clearly about investments in real time.

Rather than teaching mathematics for its own sake, this book focuses on calculations, shortcuts, mental models, and judgment frameworks that professionals can actually use in investment discussions.

Part I develops practical mental fluency across percentages, fractions, ratios, rapid estimation, compounding, the Rule of 72, capital multiples, MOIC, CAGR, IRR, time value of money, discounting, valuation multiples, yields, enterprise value, equity value, leverage, credit, interest rates, operating economics, ownership, dilution, portfolio mathematics, probability, and expected value.

Part II moves from calculation to investment judgment. It shows how to decompose returns, work backward from target returns, understand the expectations embedded in a price, trace the consequences of changing assumptions, identify numbers that can mislead, and think more clearly about probability and asymmetric outcomes.

Worked examples span private equity, public equities, credit, infrastructure, real estate, and portfolio investing.

Exercises throughout the book progress from calculation to estimation to investment sanity checks, with solutions and reasoning included.

The objective is not to turn investment professionals into human calculators. It is to make the calculation sufficiently automatic that your attention can move to the questions that matter more.

What does this number mean? What could it be hiding? And what should you ask next?