The Meb Faber Show - Better Investing
Aswath Damodaran on Sugar Daddies, The Magnificent Seven & The Art of Selling Stocks | #558
Nov 15, 2024
Aswath Damodaran, a renowned NYU professor in corporate finance and equity valuation, shares fascinating insights into investing and company dynamics. He explores the challenges of valuing stocks in a shifting economy, including the rise of buybacks. Expect an engaging discussion on AI's role in finance and a critique of ESG investing. Damodaran also highlights the impact of political connections on valuations, and he examines how social media is reshaping media consumption and the ownership landscape in professional sports.
01:03:24
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Quick takeaways
- Investing success hinges on the ability to manage emotions and make rational decisions about buying and selling stocks.
- Mature companies must adapt their financial strategies to optimize shareholder returns through dividends or stock buybacks rather than remaining fixated on growth.
Deep dives
The Importance of Timing in Investment Decisions
Investing requires careful consideration of both entry and exit points, as timing is crucial for success. Holding onto losing stocks for too long is a common mistake among investors, often fueled by the psychological reluctance to admit a wrong decision. Conversely, investors may become overly attached to winning stocks, hesitating to sell even when it’s prudent to do so. Developing a strategy that incorporates the management of emotions and decisions based on rational analysis, rather than psychological impulses, is essential for successful investing.
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