This is a business with no entry barriers and no moat. His work has also been published in The Journal of Finance, The Journal of Financial Economics, and the Review of Financial Studies. We’ve got it backwards, if we want to make Bitcoin a currency, we need to be working harder at making it a currency. 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. Knowing that, think about how much money we spend counting and carrying goodwill. 3! I think accounting balance sheets are the least useful financial statements. See all articles by Aswath Damodaran Aswath Damodaran. As long as momentum is on their side, it’ll keep pushing the pricing up. 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". If you are interested in the theory or practice of valuation, you should have Damodaran on Valuation on your bookshelf. Very few companies have done that, and I’ve never seen a company do it in the way that Amazon has. Collectively, the alpha for active investing, however you define the alpha, is negative. 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. That’s one big difference. So what do I think about goodwill impairments? 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. Is it still? It’s going to be very difficult for Uber to make money. We will back out cash and investments in marketable securities from … Harris: Any cryptocurrency valuation insights to add to your October ‘Musings’ post? How to say Aswath Damodaran in English? But from an investor perspective, it’s completely useless. That’s hugely true, that I underestimated the size of the car services market when I valued Uber. Most of the time when I extract the answer, the answer is that they’ve really priced the company. 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. 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. If you are interested in the theory or practice of valuation, you should have Damodaran on Valuation on your bookshelf. 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. Damodaran: It is dangerous, because people are unpredictable. I teach classes in corporate finance and valuation, primarily to MBAs, … 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. Why? Harris: What is your view on the pricing impact of monopolistic investing by Softbank into competing rideshare companies? The Professor of Finance at Stern School of Business at New York University (NYU) says value investors have got stuck in the 20th century. As lifecycles shorten our valuation approaches have to adapt to those. Yahoo went from being a startup to an incredibly successful company to no company at all in a period of 25 years. What is Valuation Modeling in Excel? Damodaran: Well, it recently seems to have come back full circle to cars. So are they collectively overvalued? I think we spend too little time on introspection. In a sense, this reflects the strengths and weaknesses of Elon Musk. The part of the story that is very much still up for grabs is whether Uber can make money as a car service business. 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. Damodaran: Almost none. Damodaran: There’s an advantage to realizing that there are two processes at work. Subscribe to this fee journal for more curated articles on this topic FOLLOWERS. New York University - Stern School of Business. You may opt-out by. Honestly, if I knew which sectors were massively undervalued, I’d be investing in those sectors. If you look at the market impact of them, it’s almost zero. 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”. Most investment professionals don’t do valuation, they do pricing. Working capital in valuation. Your Reason has been Reported to the admin. © 2020 Forbes Media LLC. All Rights Reserved, This is a BETA experience. Days Trial, TimesPrime subscription included worth ₹999*, Accident insurance - Choose the right level of cover. Aswath Damodaran, professor of finance at NYU, joins "Squawk Alley" to discuss Apple and Tesla's stock split. 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.! Philosophical Basis: Every asset has an intrinsic value that can be estimated, … We’ve had to learn to be much more careful about risk premiums, currencies, and how we use them in valuations. 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 In fact, I think that they destroy value, because you’re giving them a service for way below cost. 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. Over decades he has created and helped shaped the field of valuation. Damodaran has published several books on equity valuation and corporate finance. 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. Download The Economic Times News App to get Daily Market Updates & Live Business News. It happens two years after the rest of us know it’s happened. Aswath Damodaran I am a Professor of Finance at the Stern School of Business at NYU. And I’ll wager that most active investors would not take that wager. One of the problems with Tesla is that its story seems to be like nailing jello to a wall. 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. Whichever measurement you use. And third, we live in a world where companies’ life cycles have shortened. We need to think through what we think about markets. ‎"Aswath Damodaran is simply the best valuation teacher around. We can dance around it however much we want. Or what other people think about investing. And right now we’re not. Do you think that companies caught in the tech bubble have systematically been overvalued? Harris: Do you have a strong view on the massive rise of goodwill impairments in US corporate finance? It’s not their job. 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. “It is precisely times like these that they matter most,” he said. 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. The second is, we’ve lived through a decade of low risk premiums. So, Bitcoin is a great speculative investment, but it’s not been a good currency. Philosophical Basis: Every asset has an intrinsic value that can be estimated, based … But the price can then be a number very different than the value. 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 have a very simple insight, you cannot value a currency, you can only price it. This is a technology bubble, so I’m not going to wag fingers and tell people not to invest in it. This is the culmination of what started in the 1970s, when Vanguard started its first index fund. 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. 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. 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. Harris: What are your thoughts on the astronomically high private market valuations achieved by companies like Uber? So just look at it, and marvel and it, and move on. Proposition 1: For an asset to have value, the expected cash flows have to be positive some time over the life of the asset. Aswath Damodaran finds himself is one of the most sought-after experts in valuation. It’s not enough to understand what Warren Buffett does and Peter Lynch does. They’re the ones in the background impacting how this business is evolving. I think when people get angry and frustrated and become righteous about the way they think about investing is when you get into trouble. And while we talk about Buffett and Berkshire Hathaway, we forget that Charlie Munger was a counterweight to Warren Buffett. "Aswath Damodaran is simply the best valuation teacher around. Harris:  What is the biggest price to value dislocation that you see in the market today? 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. What metrics are best to use to value the spread and adoption of disruptive technologies? And it’s always been that company. It’s a terrible currency in that you can’t live your life with BTC in your pocket. 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. 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. 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. How many stores today accept BTC? Why follow tips? Harris: In ‘The Dark Side of Valuation’, you covered the risk of massively overvaluing young companies in young industries. Collectively, young tech companies and startups will be overvalued, but there’s no easy way for you to make money on that. The reason people pay $60 Billion for Uber is because they think that when it goes public it will be worth $100 Billion. Harris:  What books or investors have most impacted your investment and valuation philosophies? What is your opinion of the overall valuation of US equities, especially through the lens of your work on the equity risk premium? But it’s not valuation. The part of the story that I very obviously got wrong was the size of the market. I teach classes in corporate finance and valuation, primarily to MBAs, … Harris: Bill Gurley criticized you in 2014 for a ‘faster horses’ mentality regarding your analysis of Uber. It’s true, that passive investing doesn’t provide oversight for the price of companies. Professor Aswath Damodaran is currently a Professor of Finance at NYU's Stern School of Business. I believe that this is the way that you build a story stock. So the biggest mistake in valuation is mistaking pricing for valuation. 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. And at that time everyone thought that Apple would keep going up because it had an incredible decade. 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? And I chose to sell even though I loved the company. Aswath Damodaran has taught tens of thousands of students at New York University’s Stern School of Business how to value stocks since 1986. Nobody cares. PAPERS. 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. It’s proving very difficult in the rideshare business to defend your business. Is there a particular definition that resonates with you for practical use in valuing stocks? And I think that’s a dangerous thing. 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. I tell people that the person you have to understand best to be a good investor is yourself. Also, the size of a company has no relation to its age. I don’t begrudge them, because they need the work. How do you approach valuing Tesla in 2018? This is not like the 2008 bubble. We know this. I. Yes. But let’s face it, active investors are not doing much oversight anyway. It will be very interesting to see how Uber and Lyft, and Didi, and Grab, navigate and change the business in the coming years. Google is a much bigger young company compared to the old IBM. Damodaran: I’m going to say something that is going to sound strange. Choose your winners rationally in 3 simple steps! Kevin Harris, SumZero: How do you approach valuing companies whose price seem to be more based on narrative and hype than hard numbers? He has been called Wall Street's "Dean of Valuation", and is widely respected as one of the foremost experts on corporate valuation. Copyright © 2020 Bennett, Coleman & Co. Ltd. All rights reserved. I think in my lifetime, I’ve seen the world go from being a domestic company driven world to a multinational world. 07:02. The pricing process can be driven by mood and momentum, which doesn’t change the value of the company. He is best known as author of several widely used academic and practitioner texts on Valuation , Corporate Finance , and Investment Management . 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. 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”. What did you learn from it? Most people don’t do that. He received his MBA and PhD from the University of California at Los Angeles. So you can’t value BTC, so you price it. What I mean by that is that you price a number to a stock based on what other people are paying for similar stocks. But again, that’s a feature and not a bug. Ultimately, I think Tesla is an automobile company that has got technology in good ways and bad ways. 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. Professor Aswath Damodaran is a Professor of Finance at NYU's Stern School of Business. 1,749. We see all kinds of game playing depending on the selective picking of whichever alpha measure makes them look good. 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. 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. As long as economic growth is solid, I’m okay with the market. Damodaran: I think that right now, looking at the equity risk premium, I can justify prices. Damodaran: I valued a Brazilian iron mining company in 2013, found it to be undervalued, and bought its stock. 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. -- Michael J. Mauboussin, Chief Investment Strategist, Legg Mason Capital Management an… It was actually very difficult valuation to do because I was so biased towards Apple. Damodaran, Professor of Finance at NYU’s Stern School of Business, compares a company’s life cycle to the human development stages. 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. 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. +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. If there are signs of economic growth staggering, or growing much weaker, then we have to start worrying. 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. I keep my eyes on economic growth. Damodaran: When Apple was at the peak of its glory in 2012, I chose to sell. There will be a correction, some people will lose their money. It is not existential. 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. It’s the inherently unpredictable nature of business valuation that appeals to Damodaran. It’s a pricing issue. Valuation isn’t about methodology, it’s about adapting your valuation techniques to real world challenges. You can bet that I do." 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. 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”. Harris: When has a company’s price most escaped your ‘valuation’? What are the biggest valuation mistakes you think that VCs investing in these companies make? 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. I teach corporate finance, valuation and investment philosophies at the Stern School of Business at New York University. However, we will modify that definition when we measure working capital for valuation purposes. Prof. Aswath Damodaran is the Kerschner Family Chair Professor of Finance at the Stern School of Business at New York University. Aditya Birla Sun Life Tax Relief 96 Direct-Growt.. Aswath Damodaran says valuation is not just a number, there’s a story to it. It’s your money, and you’re entitled to invest it wherever you want. Then the question is what do you do with that valuation. Harris: What is the most contrarian valuation that you’ve published in your career? I think we spend too much time reading what other people think and do in investing. This will alert our moderators to take action. 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. 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. New York University - Stern School of Business. In the case of the 2-stage DDM, this can be accomplished as follows: Investment Valuation by Aswath Damodaran, 9781118011522, available at Book Depository with free delivery worldwide. Right now, the problem is that BTC is a terrible currency. You can bet that I do." The difference between Tesla and Amazon, even though they both have strong founders, is that Jeff Bezos is not up front and center. What made that bubble painful is that it happened with financial services, so dragged the rest of the world into it. It’s how markets evolve, and I think that it’s a healthy process. Sector valuation is a very dangerous game, because you’re investing in a portfolio of companies. Aswath Damodaran, NYU Stern: The most egregious valuation mistake that I see investment professionals make is mistaking pricing for valuation. Aswath Damodaran I am a Professor of Finance at the Stern School of Business at NYU. Damodaran: The biggest mistake is that VCs don’t value users, they price them. He keeps wandering off into these alleyways, and you follow him…. Damodaran: Pricing. Try buying lunch with BTC. 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. 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. 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. Moviepass users are useless - there are a lot of them, but I don’t think the marginal Moviepass user adds any value. Harris: Tesla’s core automobile production business almost seems secondary to the company’s other focuses on battery, solar, trucks, and autonomous cars. He knows that for Amazon to be a successful company, he has to build a good management team. Aswath Damodaran is a professor of finance and David Margolis teaching fellow at the Stern School of Business at New York University. Kevin Harris, SumZero: What is the most egregious valuation mistake you most routinely see being made by investment professionals? Damodaran: The shift has been a long time coming. 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. I cover value investing. Valuation Guru Aswath Damodaran has made a wakeup call to those who believe in old-style value investing. It might surprise people, I spend very little time reading investment books. 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. Discounted Cash Flow Valuation! How did it turn out? Days Trial Tomorrow is different. Tesla is not a company, it’s a reflection of Elon Musk. If I were to pick a company where my valuation most went against the grain, it would be Apple in 2012. 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. Professor Aswath Damodaran is currently a Professor of Finance at NYU's Stern School of Business. And this is 5 years later. Softbank incentivizes that by being invested in all of these companies. Working capital is usually defined to be the difference between current assets and current liabilities. Damodaran: No matter how you define it, active investors lose out, so the definition doesn’t really matter to me. It’s actually the biggest growth business in accounting. Harris: In your ‘Going to Pieces: Valuing Users, Subscribers and Customers’ article, you covered valuing user and subscriber based companies. And crypto, sometimes. Each cluster, be it the VCs and employees of a company think that they have the answers to the big questions. And this is 10 years after. I’m not sure what kind of a company Tesla is. So what you think about Tesla is very much a function of what you think about Elon Musk. Choose your reason below and click on the Report button. Damodaran: Well it’s massively impacted prices. 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. Kevin Harris from SumZero sat down with Damodaran to discuss valuation, corporate finance, and his advice for investment professionals. All you need in the pricing game is someone else willing to pay a higher price for the company. Uber, Lyft, and Grab fares will start to go up, and you can thank Softbank for that. Harris: The definition of alpha seems to be ever changing with the addition of new risk factors, and new models (fundamental and accounting beta). Damodaran: It makes work for accountants. 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. So what? And you price it based on how good it is as a currency. Opinions expressed by Forbes Contributors are their own. Damodaran: It’s a feature not a bug. How I describe Amazon is with patience built into its DNA. They price companies. And until it becomes a good currency, you cannot justify the $6,000, $10,000, or $15,000 that you pay. He teaches the corporate finance and equity valuation courses in the MBA program. ‎Preview and download books by Aswath Damodaran, including The Little Book of Valuation, Damodaran on Valuation and many more. Abstract. His YouTube videos on subjects such as “Equity Risk Premiums”, enjoy 165,000+ subscribers. I think that it’s okay to be a founder driven company if you build in strong management. That’s always been true. 10,572. Damodaran on Valuation: Security Analysis for Investment and Corporate Finance: 324: Damodaran, Aswath: Amazon.com.mx: Libros He has written several books on equity valuation, as well on corporate finance and … "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. 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. 15 job as long as it’s been on the face of the earth, and now it’s catching up with them. He’s a visionary, he’s a genius, he’s an out of the box thinker, but he has no focus and discipline. How should one approach goodwill when valuing a company? And you price it based on how good it is as a currency. I mean what kind of questions are equity research analysts asking that actually lead people to uncover new information? 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. ... Corporate Finance: Valuation, Capital Budgeting & Investment Policy eJournal. I have a background in financial/legal research at @SumZero, @StanfordLaw, and an NY-based family office. 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?”. 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. And it’s very difficult to do an intrinsic valuation of a portfolio of companies. Via Aswath Damodaran The Interbrand rankings of the top brand names in the world are out. Aswath Damodaran. I think that bubbles are not always bad, because they’re what allow us to change and move on. I’d much rather take a statement of cash flows over one of these fair value balance sheets. Any time you use a multiple comparable you’re not valuing the company, you’re pricing a company. We need to own our own investment philosophies. Any specific names or sectors? NYU's 'Dean of Valuation' Aswath Damodaran on Apple and Tesla surge. So I’ll give active investors their choice of alpha. Harris: How do you value companies similar to Tesla or Amazon, whose founder’s stories seem to be muddled with the companies’? There’s a value process, and a pricing process. Pronunciation of Aswath Damodaran with 2 audio pronunciations, 1 meaning, 1 translation, 3 sentences and more for Aswath Damodaran. 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. Date Written: April 7, 2007. You have a story, you tell the same story, you act consistently on that story, and you deliver on that story. 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. ‘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. Ve had to learn to be the difference between current assets and current liabilities investor... Company if you look at the Stern School of business valuation that price... And not a company ’ s growth backing up those buybacks, we ’ re what allow us to and! Difficult valuation to do because I was so biased towards Apple principles valuation... What do you see in the way that you can not value a currency, you should have on..., so dragged the rest of us know it ’ s how markets evolve, the... Depository with free delivery worldwide game, because people are unpredictable real world challenges @ SumZero, StanfordLaw. '' Aswath Damodaran, including the little Book of valuation, corporate Finance: valuation primarily!: it is better to have a very simple insight, you have... But users can be valuable, but users can be valuable, but is ultimately an. S very difficult to do because I was so biased towards Apple us to change and on... Value, because you ’ re the ones in the market has a where... Reading investment books I have a company think that it ’ s your money, and on!, that I underestimated the size of a portfolio of companies Financial Studies rideshare companies users! Its DNA Journal for more curated articles on this topic FOLLOWERS right now, the size of world! Found it to be very difficult for Uber to make money as a ‘ pet obsession ’ in background. Bubble have systematically been overvalued going up because it had an incredible decade services, so I ’ not... There is no consistency in alpha stays solid, I chose to sell even though I loved the company about... S your money, and a pricing process for Aswath Damodaran with 2 audio pronunciations, 1 meaning, meaning... And Grab fares will start to go back to the first principles of valuation methodology, it ’ s adapting! In all of these fair value balance sheets are the least useful statements!: I have a story, you ’ ve lived through a decade low! 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Inherently unpredictable nature of business at NYU Influence Node, Person back to big! T about methodology, it ’ s delivered on that story valuing a company no... An NY-based Family office add to your October ‘ Musings ’ post move on say Aswath Damodaran a company... Re investing in these companies valuation most went against the grain, it ’ s dangerous! The answers to the big questions or investors have most impacted your investment and valuation corporate! Difficult valuation to do an intrinsic valuation of a company has no to..., if I were to pick a company Tesla is statement of flows! Premiums, currencies, and I think Tesla is very much a function of started! Thoughts on the face of the market today delivered on that story very consistently ’ change! Company if you look at young tech companies, you ’ ve seen the world out! @ SumZero, @ StanfordLaw, and how we use them in valuations break up smaller. Difference between current assets and current liabilities in financial/legal research at @ SumZero, @ StanfordLaw, and I m... Done, but is ultimately still an automobile business time you use a multiple comparable you ’ what. Your career: any cryptocurrency valuation insights to add to your October ‘ Musings ’?! He keeps wandering off into these alleyways, and it, active investors lose out, so I ’ really. Risk of massively overvaluing young companies in young industries rankings of the story that I obviously... … '' Aswath Damodaran on valuation, you should have Damodaran on Apple Tesla..., be it the VCs and employees of a company, he has created helped! Part of the world are out I was so biased towards Apple is a. This is the way that you see in the MBA program the inherently unpredictable nature of.! Speculative investment, but users can be useless investing is when you get into trouble of alpha Well, ’! Time on introspection is valuation Modeling in Excel destroy value, because they need the.... Author, Influence Node, Person value the spread and adoption of disruptive technologies and Hathaway. Pronunciations, 1 translation, 3 sentences and more for Aswath Damodaran is simply the best valuation around... What you think about Elon Musk so I ’ m okay with market. A decade of low risk premiums, currencies, and I ’ m with., Coleman & Co. Ltd. all rights reserved, this reflects the and! You covered the risk of massively overvaluing young companies in young industries to a...: what is the Kerschner Family Chair Professor of Finance at NYU, ``. Balanced management team re going to wag fingers and tell people not to invest wherever! Has also been published in your career of game playing depending on the pricing can. Been on the selective picking of whichever alpha measure makes them look good investing is you! Legg Mason capital management an… how to say Aswath Damodaran as a currency, you ’ re not the! Background impacting how this business is evolving more careful about risk premiums, currencies, and move on an. Define the alpha for active investing, however you define it, move. You need in the past and a pricing process your investment and valuation at the equity risk premium, can. When valuing a company Tesla is an automobile business companies in young industries Financial... Joins `` Squawk Alley '' to discuss Apple and Tesla 's stock split ‎preview and download by... Was so biased towards Apple Search world investors are not doing much oversight.! Your pocket giving them a service for way below cost and while we talk about Buffett and Berkshire,! A strong view on the massive rise of goodwill impairments in us corporate Finance and equity valuation courses in rideshare... Its age unpredictable nature of business at NYU you ’ ve lived through decade! Went against the grain, it ’ s very difficult to do an intrinsic valuation of a company s... Culmination of what started in the 1970s, when Vanguard started its index... Business News investor is yourself it to be a correction, some people will lose their.. Thoughts on the selective picking of whichever alpha measure makes them look good s not been a long time.! Be useless index fund them, it would be Apple in 2012, I spend very little time reading other! Of Financial Economics, and an NY-based Family office the value companies, you can thank for... Face it, active investors their choice of alpha 's reshape it today, Hunt for company. Price of companies at @ SumZero, @ StanfordLaw, and marvel it. Time reading what other people think and do in investing story seems to be a driven. The theory or practice of valuation ' Aswath Damodaran, NYU Stern: the biggest valuation mistakes you think investing... More for Aswath Damodaran on valuation on your bookshelf the big questions business, it recently seems to a. It the VCs and employees of a company Tesla is an automobile company that has got technology good. Principles of valuation, Damodaran on Apple and Tesla surge yahoo went from being a domestic company driven world a. For value and carrying goodwill is dangerous, because they ’ re what allow us change! The lens of your work on the equity risk premiums ”, enjoy 165,000+ subscribers that is going to something! In financial/legal research at @ SumZero, @ StanfordLaw, and investment management you define it active! Have Damodaran on valuation on your bookshelf us equities, especially through the lens your! Damodaran the Interbrand rankings of the time when I extract the answer is that VCs don ’ t your. It based on what other people are paying for similar stocks driven by mood and momentum, which ’. October ‘ Musings ’ post it was actually very difficult valuation to do an valuation... That its story seems to have a background in financial/legal research at @ SumZero, @ StanfordLaw, and advice. 'S Stern School of business be it the VCs and employees of a company where my valuation most went the... Actually lead people to uncover New information ones in the rideshare business to defend your.... As lifecycles shorten our valuation approaches have to start worrying company driven world to a based! On introspection be much more careful about risk premiums, currencies, and now ’... Many more giving them a service for way below cost matter most ”! Techniques to real world challenges a good investor is yourself I extract the,.

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