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Aswath Damodaran: A Valuation Expert’s Take on Inflation, Stock Buybacks, ESG, and More

The Long View

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How to Value a Company With a Low Equity Risk Premium

When you have a really low equity risk premium, you worry. I could be right about my stock, what if the market is wrong? The reason I don't let that enter the discussion when I'm looking at individual stocks is then it can paralyze me because I'm going to finish my valuation. When I value companies, I try to stay as far away from macro judgments as I can because they suck up your energy and take away your faith. So I tell people be as macro neutral as you can when you value individual companies no matter what concerns you have.

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