Motley Fool Money Aswath Damodaran on Valuation, Inflation, Bezos, and Musk
Sep 11, 2022
Aswath Damodaran, a renowned Professor of Corporate Finance and Valuation at NYU, shares his insights on navigating today's investment landscape. He delves into the complexities of inflation and its impact on investing strategies. The discussion highlights the erratic valuation of Tesla and the role storytelling plays in investor perception. Damodaran contrasts the leadership styles of Elon Musk and Jeff Bezos, exploring how their unique approaches shape their companies' fortunes. His contrarian views on ESG scoring also provoke thought on corporate responsibility.
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Unexpected Inflation's Impact
- High unexpected inflation, not simply high inflation, is the core issue for businesses and investors.
- Unexpected inflation makes planning and incorporating inflation into contracts difficult, unlike stable, predictable inflation.
Valuation Principles
- Focus on cash flows, growth, and risk when evaluating investments.
- Understand that price is influenced by market sentiment and not always aligned with value; research catalysts that can close this gap.
Time Horizon's Importance
- Time is an investor's ally, requiring a long-term horizon.
- Individual investors have a time horizon advantage over portfolio managers because their time horizon is dictated by their clients.
