The big question is whether the big surge in buybacks that we’ve seen is trapped cash being returned or whether it’s going to subside. This is not like the 2008 bubble. I teach classes in corporate finance and valuation, primarily to MBAs, … Damodaran: Well, it recently seems to have come back full circle to cars. And crypto, sometimes. So are they collectively overvalued? And it’s very difficult to do an intrinsic valuation of a portfolio of companies. You can bet that I do." Philosophical Basis: Every asset has an intrinsic value that can be estimated, … +TimesPrime subscription included worth ₹999*, Sharp Insight-rich, Indepth stories across 20+ sectors, Access the exclusive Economic Times stories, Editorial and Expert opinion, Mirae Asset Emerging Bluechip Fund Direct-Growth. That’s what I think separates founder run companies that survive and become great companies, and founder run companies that crash and burn with their founders. Kevin Harris from SumZero sat down with Damodaran to discuss valuation, corporate finance, and his advice for investment professionals. And while we talk about Buffett and Berkshire Hathaway, we forget that Charlie Munger was a counterweight to Warren Buffett. ... Corporate Finance: Valuation, Capital Budgeting & Investment Policy eJournal. I’m not sure what kind of a company Tesla is. Harris: In ‘The Dark Side of Valuation’, you covered the risk of massively overvaluing young companies in young industries. Until active investing comes up with a good rationale for why we should be paying people to manage our money and lose 1% relative to an index, all their arguments about how terrible passive investing is for stock prices goes out the window. Working capital is usually defined to be the difference between current assets and current liabilities. Harris: Do you have a strong view on the rise of passive investing vs. active and any dislocations that may be surfacing as a result? But let’s face it, active investors are not doing much oversight anyway. And I chose to sell even though I loved the company. Try buying lunch with BTC. Damodaran, Professor of Finance at NYU’s Stern School of Business, compares a company’s life cycle to the human development stages. As lifecycles shorten our valuation approaches have to adapt to those. How many stores today accept BTC? Harris: Do you have a strong view on the massive rise of goodwill impairments in US corporate finance? It was actually very difficult valuation to do because I was so biased towards Apple. 10,572. Copyright © 2020 Bennett, Coleman & Co. Ltd. All rights reserved. © 2020 Forbes Media LLC. Valuation is about digging through a business, understanding the business, understanding its cash flows, growth, and risk, and then trying to attach a number to a business based on its value as a business. Damodaran: The biggest mistake is that VCs don’t value users, they price them. In a sense, this reflects the strengths and weaknesses of Elon Musk. Ultimately, I think Tesla is an automobile company that has got technology in good ways and bad ways. There will be a correction, some people will lose their money. There’s nothing wrong with pricing. He knows that for Amazon to be a successful company, he has to build a good management team. But from an investor perspective, it’s completely useless. Damodaran: I’m going to say something that is going to sound strange. Damodaran: Almost none. Uber, Lyft, and Grab fares will start to go up, and you can thank Softbank for that. How to say Aswath Damodaran in English? Harris: What are your thoughts on the astronomically high private market valuations achieved by companies like Uber? Knowing that, think about how much money we spend counting and carrying goodwill. Damodaran: No matter how you define it, active investors lose out, so the definition doesn’t really matter to me. Days Trial, TimesPrime subscription included worth ₹999*, Accident insurance - Choose the right level of cover. Damodaran: Well it’s massively impacted prices. Collectively, the expected returns on stocks, based on the cash flows that we’re seeing right now, is close to 8.3%, which is at a high in terms of what we’ve seen over the last 10 years. Then the question is what do you do with that valuation. Over decades he has created and helped shaped the field of valuation. Kevin Harris, SumZero: How do you approach valuing companies whose price seem to be more based on narrative and hype than hard numbers? Date Written: April 7, 2007. This is a technology bubble, so I’m not going to wag fingers and tell people not to invest in it. New York University - Stern School of Business. All you need in the pricing game is someone else willing to pay a higher price for the company. How often do you see Bezos tweeting about an Amazon problem? Opinions expressed by Forbes Contributors are their own. Active investing collectively has done a crappy job as long as it’s been on the face of the earth, and now it’s catching up with them. His work has also been published in The Journal of Finance, The Journal of Financial Economics, and the Review of Financial Studies. I mean what kind of questions are equity research analysts asking that actually lead people to uncover new information? Aswath Damodaran has taught tens of thousands of students at New York University’s Stern School of Business how to value stocks since 1986. I graduated with an MA from the University of Edinburgh in 2016. EY & Citi On The Importance Of Resilience And Innovation, Impact 50: Investors Seeking Profit — And Pushing For Change, Michigan Economic Development Corporation BrandVoice. I. Most of the time when I extract the answer, the answer is that they’ve really priced the company. Aswath Damodaran finds himself is one of the most sought-after experts in valuation. Working capital in valuation. I cover value investing. But the price can then be a number very different than the value. Days Trial It is better to have a company with a more balanced management team. I’ve read the classics, and I think that Random Walk Down Wall Street is a great book, I think that Security Analysis is a great book (if you can make it all the way through), but I think that what you’re looking for is a philosophy rather than a technique. Damodaran: I think that if you look at young tech companies, you’re going to find the biggest divergence. What is Valuation Modeling in Excel? Active investors are not doing their job, so I’m not as cynical of passive investing translating into less information being generated, because there’s very little information being generated in active investing right now. Ninety percent of the time, when someone says “I’ve valued a company at X”, I always have to stop and ask them, “What do you mean value the company?”. As a business, it’s shaken up the way that things are done, but is ultimately still an automobile business. For reprint rights: Stop treating everything marquee investors say as the gospel truth: Aswath Damodaran, Most active funds will get wiped out by ETFs & index funds: Aswath Damodaran, Don’t pay heed to commodity prophecies, they’re always wrong: Aswath Damodaran, I take everybody including Warren Buffett, Ray Dalio with a grain of salt: Aswath Damodaran, Be incremental and multibaggers will follow: Aswath Damodaran, NYU Stern School of Business, Mean reversion talk is asking markets to do the impossible: Aswath Damodaran, NYU Stern School of Business. Softbank incentivizes that by being invested in all of these companies. “It is precisely times like these that they matter most,” he said. Choose your winners rationally in 3 simple steps! Honestly, if I knew which sectors were massively undervalued, I’d be investing in those sectors. He keeps wandering off into these alleyways, and you follow him…. It’s the nature of young companies and young markets, that you will overvalue them, because you’re looking at clusters of what I call overoptimism. Not so simple Mr Damodaran! Very few companies have done that, and I’ve never seen a company do it in the way that Amazon has. There is no short cut... Damodaran's Investment Valuation explains the … Aswath Damodaran is a Professor of Finance at the Stern School of Business at New York University, where he teaches corporate finance and equity valuation. It’s true, that passive investing doesn’t provide oversight for the price of companies. NYU's 'Dean of Valuation' Aswath Damodaran on Apple and Tesla surge. Each cluster, be it the VCs and employees of a company think that they have the answers to the big questions. Professor Aswath Damodaran is a Professor of Finance at NYU's Stern School of Business. Yes. And you price it based on how good it is as a currency. Collectively, young tech companies and startups will be overvalued, but there’s no easy way for you to make money on that. Damodaran: When Apple was at the peak of its glory in 2012, I chose to sell. Aswath Damodaran I am a Professor of Finance at the Stern School of Business at NYU. Is it still? It’s going to mean that there’s going to be a lot more splitting up of the market, like with Uber and Didi in China, and with Uber and Grab’s agreement in Southeast Asia. He received his MBA and PhD from the University of California at Los Angeles. Very Interesting aspect of such Life Cycle of Firms or the Persons running the SHOW and hope AGE would be just Numbers at all times, Inciting hatred against a certain community, 15 So I think that there’s a lot about the ridesharing business that we’re going to find out about in the next year or two. Tomorrow is different. It’s a terrible currency in that you can’t live your life with BTC in your pocket. I think in my lifetime, I’ve seen the world go from being a domestic company driven world to a multinational world. Aswath Damodaran is a professor of finance and David Margolis teaching fellow at the Stern School of Business at New York University. Damodaran: I think that right now, looking at the equity risk premium, I can justify prices. I think we spend too little time on introspection. I think that it’s okay to be a founder driven company if you build in strong management. ‎"Aswath Damodaran is simply the best valuation teacher around. A standard critique of valuation models, in general, and discounted cash flow models in particular is that they fail to fully account for the many intangible assets possessed by firms. It’s told the same story for 20 years, and it’s delivered on that story very consistently. Why follow tips? What did you learn from it? Abstract. My name is Aswath Damodaran and I teach corporate finance and valuation at the Stern School of Business at New York University. What are the biggest valuation mistakes you think that VCs investing in these companies make? If the pricing process is strong enough, you can be right and go bankrupt being right on the company’s value, because the pricing process can keep pushing the price away from the value for extended periods. Harris:  What is the biggest price to value dislocation that you see in the market today? Discounted Cash Flow Valuation! As long as economic growth is solid, I’m okay with the market. Your Reason has been Reported to the admin. Collectively, the alpha for active investing, however you define the alpha, is negative. In our past trainings with him all our participants were enthusiastic with the motivating and dynamic method of delivery as well as the personal interaction. Aswath Damodaran is a Professor of Finance at the Stern School of Business at New York University, where he teaches corporate finance and equity valuation. What made that bubble painful is that it happened with financial services, so dragged the rest of the world into it. Damodaran: It is dangerous, because people are unpredictable. Aswath Damodaran 2 Discounted Cashflow Valuation: Basis for Approach n where CF t is the cash flow in period t, and r is the discount rate appropriate given the riskiness of the cash flow and t is the life of the asset. Harris: Any cryptocurrency valuation insights to add to your October ‘Musings’ post? Active investors like to tell how many bad things come out of passive investing, and there are arguments you can make about how terrible passive investing is, but the reality is that active investing needs to get its act together, and collectively starts thinking about what it brings to the table that is differentiated. I teach classes in corporate finance and valuation, primarily to MBAs, … I think when people get angry and frustrated and become righteous about the way they think about investing is when you get into trouble. Aswath Damodaran I am a Professor of Finance at the Stern School of Business at NYU. Valuation modeling in Excel may refer to several different types of analysis, including discounted cash flow (DCF) DCF Model Training Free Guide A DCF model is a specific type of financial model used to value a business. ‎Preview and download books by Aswath Damodaran, including The Little Book of Valuation, Damodaran on Valuation and many more. Aswath Damodaran Professor, Author, Influence Node, Person. Valuation guru Aswath Damodaran says companies, like human beings, have a life cycle and a firm’s valuation should be able to reflect its position in the lifecycle. Damodaran: There’s an advantage to realizing that there are two processes at work. So I bought at the wrong time, lost some money, and I learnt that when I’m valuing commodity companies I can’t just take the monthly numbers and work with them. If you are interested in the theory or practice of valuation, you should have Damodaran on Valuation on your bookshelf. Harris: What is the most contrarian valuation that you’ve published in your career? I think accounting balance sheets are the least useful financial statements. How do you approach valuing Tesla in 2018? And you price it based on how good it is as a currency. Most VC’s are still pricing users, with the assumption that all users have value, and that all their data is going to be useful. If there are signs of economic growth staggering, or growing much weaker, then we have to start worrying. Remember, Elon Musk has other fish in the fire, he has his spaceship business, his boring business, and so you have to keep your eye on the ball. We also know, collectively, there is no consistency in alpha. Active investors like to talk about how much collective value they bring to the table, but if you ask where is that value added coming from, they stutter and stammer, because they can’t think of good reasons. You have a story, you tell the same story, you act consistently on that story, and you deliver on that story. The part of the story that I very obviously got wrong was the size of the market. I think increasingly that the ridesharing companies think that the future lies in each of them carving out markets for themselves where they don’t face competition. But again, that’s a feature and not a bug. Which means I spend a lot more time with the Wall Street Journal and reading the news of today and trying to figure out why companies are doing what they’re doing rather than focusing on what other people think about companies. Subscribe to this fee journal for more curated articles on this topic FOLLOWERS. And until it becomes a good currency, you cannot justify the $6,000, $10,000, or $15,000 that you pay. He is best known as author of several widely used academic and practitioner texts on Valuation , Corporate Finance , and Investment Management . One of the problems with Tesla is that its story seems to be like nailing jello to a wall. Pronunciation of Aswath Damodaran with 2 audio pronunciations, 1 meaning, 1 translation, 3 sentences and more for Aswath Damodaran. Damodaran has published several books on equity valuation and corporate finance. It’s got very little to do with fundamentals, and everything to do with “is there somebody else out there who will pay me a higher price for this company”. The reason I wrote that paper is to illustrate that users can be valuable, but users can be useless. PAPERS. Damodaran: It’s a feature not a bug. Via Aswath Damodaran The Interbrand rankings of the top brand names in the world are out. Damodaran on Valuation: Security Analysis for Investment and Corporate Finance: 324: Damodaran, Aswath: Amazon.com.mx: Libros Damodaran: It’s because I’ve never seen a company as focused on a story and stay with that story through good times and bad times. That’s what Tesla needs, a management team that is strong - and for Elon Musk to let go of some of the things that he’s trying to do. Any time you use a multiple comparable you’re not valuing the company, you’re pricing a company. We see all kinds of game playing depending on the selective picking of whichever alpha measure makes them look good. And this is 5 years later. Any specific names or sectors? We’ve got it backwards, if we want to make Bitcoin a currency, we need to be working harder at making it a currency. Harris: The definition of alpha seems to be ever changing with the addition of new risk factors, and new models (fundamental and accounting beta). In a sense, Berkshire is a Warren Buffett company, but it isn’t entirely Buffett, it’s Munger, and it’s Jain, and this demonstrates that the key is having a strong team. It’s actually the biggest growth business in accounting. In the case of the 2-stage DDM, this can be accomplished as follows: Or what other people think about investing. Moviepass users are useless - there are a lot of them, but I don’t think the marginal Moviepass user adds any value. I think we spend too much time reading what other people think and do in investing. See all articles by Aswath Damodaran Aswath Damodaran. Damodaran: I valued a Brazilian iron mining company in 2013, found it to be undervalued, and bought its stock. Google is a much bigger young company compared to the old IBM. People think that if they search long enough, they can answers to their questions, when what in fact what they need to do is to stop and think about the questions and think through their answers. I think that we have to differentiate between users, and to do that we have to start asking serious questions about what separates good users from bad users, what separates valuable users from useless users. The conundrum investors face is in valuing that company is that if the company has been priced, you can come up with a value very different from the price. I keep my eyes on economic growth. That’s hugely true, that I underestimated the size of the car services market when I valued Uber. As long as momentum is on their side, it’ll keep pushing the pricing up. Interesting valuation presentation by Aswath Damodaran where he values Tata Group companies using the DCF approach explained in detail Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. Aswath Damodaran. Netflix users, are clearly much more valuable as a commodity. Damodaran: It makes work for accountants. So what you think about Tesla is very much a function of what you think about Elon Musk. As always, they have created buzz in the financial press, with the big news story being the displacement of Coca Cola from its perennial number one spot and the rise of technology companies (Apple and Google have the first two spots and there are four other tech companies in the top ten) in the rankings. I tell people that the person you have to understand best to be a good investor is yourself. Damodaran: I think what I missed in 2014, which Bill was right on, is that Uber has attracted people into the car service business who otherwise would have taken mass transit or driven their own cars. I have a background in financial/legal research at @SumZero, @StanfordLaw, and an NY-based family office. Aswath Damodaran had some advice for the audience at the 73rd CFA Institute Annual Virtual Conference: Don’t abandon valuation fundamentals during the COVID-19 crisis. And third, we live in a world where companies’ life cycles have shortened. And at that time everyone thought that Apple would keep going up because it had an incredible decade. He’s a visionary, he’s a genius, he’s an out of the box thinker, but he has no focus and discipline. That’s the big question. 3! I believe that this is the way that you build a story stock. We’ve had to learn to be much more careful about risk premiums, currencies, and how we use them in valuations. Aswath Damodaran 17 Discounted Cash Flow Valuation What is it: In discounted cash flow valuation, the value of an asset is the present value of the expected cash flows on the asset. Investment Valuation by Aswath Damodaran, 9781118011522, available at Book Depository with free delivery worldwide. So I think that you can look at bubbles as a bad thing and try to make them go away, but I think that they’re a good feature of markets and allow us to shift from one business to another, from one technology to another. So what do I think about goodwill impairments? We will back out cash and investments in marketable securities from … That’s always been true. So you can’t value BTC, so you price it. They’re the ones in the background impacting how this business is evolving. In our past trainings with him all our participants were enthusiastic with the motivating and dynamic method of delivery as well as the personal interaction. Known as "the Dean of Valuation" due to his expertise in that subject, Damodaran is best known as author of several widely used academic and practitioner texts on Valuation, Corporate Finance and Investment Management; he is widely quoted on the subject of valuation, with "a great reputation as a teacher and authority". We can dance around it however much we want. It might surprise people, I spend very little time reading investment books. Most people don’t do that. All Rights Reserved, This is a BETA experience. Aswath Damodaran, NYU Stern: The most egregious valuation mistake that I see investment professionals make is mistaking pricing for valuation. Damodaran: Pricing. It’s not enough to understand what Warren Buffett does and Peter Lynch does. Right now, the problem is that BTC is a terrible currency. Also, the size of a company has no relation to its age. However, we will modify that definition when we measure working capital for valuation purposes. It’s going to be very difficult for Uber to make money. Let's reshape it today, Hunt for the brightest engineers in India. Choose your reason below and click on the Report button. There are many old companies that break up into smaller businesses and become young again. You can bet that I do." The pricing process can be driven by mood and momentum, which doesn’t change the value of the company. Valuation Guru Aswath Damodaran has made a wakeup call to those who believe in old-style value investing. The lesson from the valuation, was that for iron ore mining companies, it takes about 2 or 3 years for shifting iron ore prices to shorten earnings. I’d much rather take a statement of cash flows over one of these fair value balance sheets. And I think that’s a dangerous thing. That’s one big difference. Harris: The current long-lived bull market plus two crashes in recent memory seems to have left investors skittish about the future prospects of the market. We have to think globally, which is one shift, You have to think about not just the risk premiums from the market you’re in, but also the risk premiums of the rest of the world. The second is, we’ve lived through a decade of low risk premiums. If you are interested in the theory or practice of valuation, you should have Damodaran on Valuation on your bookshelf. In Corporate Finance with Professor Aswath Damodaran, ... Over the course of 15 weeks, students will learn about risk, valuation, betas, dividends, and more, along with their real-world applications. So the biggest mistake in valuation is mistaking pricing for valuation. What metrics are best to use to value the spread and adoption of disruptive technologies? This will alert our moderators to take action. Why? So right now, I’m not looking at the market, or CAPE or P/E, or other traditional measures, I’m looking at economic growth. The Professor of Finance at Stern School of Business at New York University (NYU) says value investors have got stuck in the 20th century. We need to think through what we think about markets. We know this. Aswath Damodaran! So what? So, Bitcoin is a great speculative investment, but it’s not been a good currency. I teach corporate finance, valuation and investment philosophies at the Stern School of Business at New York University. Download The Economic Times News App to get Daily Market Updates & Live Business News. Aditya Birla Sun Life Tax Relief 96 Direct-Growt.. Aswath Damodaran says valuation is not just a number, there’s a story to it. Prof. Aswath Damodaran is the Kerschner Family Chair Professor of Finance at the Stern School of Business at New York University. What I mean by that is that if there’s a line of VCs and you go up to a VC and say “I have a million users”, the VC says “Amazing, I’ll pay you $1 Billion”. The reason people pay $60 Billion for Uber is because they think that when it goes public it will be worth $100 Billion. You pick the alpha, and let’s see if you can deliver a positive alpha using your own definition of alpha 5 years in a row. It’s not their job. Active investors like to talk about how much collective value they bring to the table, but if you ask where is that value added coming from, they stutter and stammer, because they can’t think of good reasons. So just look at it, and marvel and it, and move on. Do you think that companies caught in the tech bubble have systematically been overvalued? It’s proving very difficult in the rideshare business to defend your business. 07:02. Harris:  What books or investors have most impacted your investment and valuation philosophies? It’s the inherently unpredictable nature of business valuation that appeals to Damodaran. "Aswath Damodaran is simply the best valuation teacher around. 1,749. Harris: In your ‘Going to Pieces: Valuing Users, Subscribers and Customers’ article, you covered valuing user and subscriber based companies. It will be very interesting to see how Uber and Lyft, and Didi, and Grab, navigate and change the business in the coming years. It’s your money, and you’re entitled to invest it wherever you want. What I mean by that is that you price a number to a stock based on what other people are paying for similar stocks. You may opt-out by. Proposition 1: For an asset to have value, the expected cash flows have to be positive some time over the life of the asset. It’s a pricing issue. Aswath Damodaran, professor of finance at NYU, joins "Squawk Alley" to discuss Apple and Tesla's stock split. Harris: When has a company’s price most escaped your ‘valuation’? His YouTube videos on subjects such as “Equity Risk Premiums”, enjoy 165,000+ subscribers. Tesla is not a company, it’s a reflection of Elon Musk. Having said that, the rest of what I wrote about Uber is playing out. Sector valuation is a very dangerous game, because you’re investing in a portfolio of companies. And I’ll wager that most active investors would not take that wager. Whichever measurement you use. What is it: In discounted cash flow valuation, the value of an asset is the present value of the expected cash flows on the asset.! Yahoo went from being a startup to an incredibly successful company to no company at all in a period of 25 years. How should one approach goodwill when valuing a company? This is a business with no entry barriers and no moat. We need to own our own investment philosophies. Damodaran has been voted 'Professor of the Year' by Stern's graduating MBA class five times, and has been awarded NYU's Excellence in Teaching and Distinguished Teaching awards. Damodaran: I have a very simple insight, you cannot value a currency, you can only price it. It’s how markets evolve, and I think that it’s a healthy process. The part of the story that is very much still up for grabs is whether Uber can make money as a car service business. Over decades he has created and helped shaped the field of valuation. I have to clean them up for whatever has happened to commodity pricing over that period and then come up with numbers that reflect the commodity prices current impact on the company. New York University - Stern School of Business. Harris: Tesla’s core automobile production business almost seems secondary to the company’s other focuses on battery, solar, trucks, and autonomous cars. Aswath Damodaran 182 The Value of Growth n In any valuation model, it is possible to extract the portion of the value that can be attributed to growth, and to break this down further into that portion attributable to “high growth” and the portion attributable to “stable growth”. He has written several books on equity valuation, as well on corporate finance and … How did it turn out? Kevin Harris, SumZero: What is the most egregious valuation mistake you most routinely see being made by investment professionals? Philosophical Basis: Every asset has an intrinsic value that can be estimated, based … Is there a particular definition that resonates with you for practical use in valuing stocks? But as long as we are informed in our decisions, make our own, and are willing to look at the losses, things will be fine. -- Michael J. Mauboussin, Chief Investment Strategist, Legg Mason Capital Management an… Harris: What is your view on the pricing impact of monopolistic investing by Softbank into competing rideshare companies? This is the culmination of what started in the 1970s, when Vanguard started its first index fund. Prof. Aswath Damodaran is the Kerschner Family Chair Professor of Finance at the Stern School of Business at New York University. As long as there’s growth backing up those buybacks, we’re going to be okay. Harris: What are the most important innovations in valuation methodology during your career? And it’s always been that company. He teaches the corporate finance and equity valuation courses in the MBA program. ‘Dean of Valuation’ Aswath Damodaran on FAANG Stocks, the Economy, and Companies Worth Buying “Over the long term, I think winners and losers will be seen more in terms of sectors rather than countries,” asserts the NYU business school professor. If I were to pick a company where my valuation most went against the grain, it would be Apple in 2012. Harris: Bill Gurley criticized you in 2014 for a ‘faster horses’ mentality regarding your analysis of Uber. How I describe Amazon is with patience built into its DNA. I think that we live in a Google Search world. The tools and practice of valuation is intimidating to most laymen, who assume that they do not have the skills and the capability to value companies. And this is 10 years after. Nobody cares. I think that bubbles are not always bad, because they’re what allow us to change and move on. There’s a value process, and a pricing process. But it’s not valuation. So I’ll give active investors their choice of alpha. “You need to go back to the first principles of valuation. Harris: How do you value companies similar to Tesla or Amazon, whose founder’s stories seem to be muddled with the companies’? Professor Aswath Damodaran is currently a Professor of Finance at NYU's Stern School of Business. In fact, I think that they destroy value, because you’re giving them a service for way below cost. Active investors like to tell how many bad things come out of passive investing, and there are arguments you can make about how terrible passive investing is, but the reality is that active investing needs to get its act together, and collectively starts thinking about what it brings to the table that is differentiated. They price companies. 15 Valuation isn’t about methodology, it’s about adapting your valuation techniques to real world challenges. He has been called Wall Street's "Dean of Valuation", and is widely respected as one of the foremost experts on corporate valuation. There doesn’t need to be a fundamental rationale for value. If you look at the market impact of them, it’s almost zero. And right now we’re not. Professor Aswath Damodaran is currently a Professor of Finance at NYU's Stern School of Business. "Aswath Damodaran's work is always worth reading... For investors and students of the financial markets who want to embark on serious fundamental analysis, it is critical to understand how to go about valuing stocks and other instruments. Fair value accounting in general has given accounting a new business. Most investment professionals don’t do valuation, they do pricing. You’re not buying a piece of all of Elon Musk, you’re buying a piece of Elon Musk’s Tesla story, and that is ultimately an automobile focus. Harris: What made you describe Amazon as a ‘pet obsession’ in the past? job as long as it’s been on the face of the earth, and now it’s catching up with them. As long as it stays solid, the market has a base to go back to. I don’t begrudge them, because they need the work. It is not existential. I describe myself as a teacher first, who also happens to love untangling the puzzles of corporate finance and valuation, and writing about my experiences. I bought it on the expectation that because iron ore prices had recently fallen, and that the price reflected that, it was going to recover. The difference between Tesla and Amazon, even though they both have strong founders, is that Jeff Bezos is not up front and center. Damodaran: The shift has been a long time coming. What is your opinion of the overall valuation of US equities, especially through the lens of your work on the equity risk premium? It happens two years after the rest of us know it’s happened.
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