Expert: Aswath Damodaran - Valuation 101: Every number tells a story

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Mar 11, 2024

Valuation expert Aswath Damodaran discusses key concepts including price v value, drivers of valuation, and inflation impact. Delve into valuing Big Tech, winner-take-all economics and mastering patience in investing. Explore Nvidia's role in tech advancements.

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ADVICE

Valuation Basics

Start with valuation basics, focusing on cash flows or comparable business prices.
Build up complexity from there, acknowledging that forecasting is the real challenge.

INSIGHT

Valuation vs. Prediction

The mechanics of valuation are simple; the difficulty lies in predicting the future.
Separate valuation mechanics from the inherent uncertainty of future predictions.

INSIGHT

Price vs. Value

Pricing is determining worth based on what others pay, while valuation considers the business itself.
Most people do pricing, even when claiming to do valuation, due to a perceived higher status of valuation.

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For investors of any level, getting your head around valuation is one of the most challenging aspects of investing. So to help us build our skills, we’ve turned to one of the world’s best-known experts on valuation, Aswath Damodaran.

Aswath Damodaran is a Professor of Finance at the Stern School of Business at New York University and is known in the finance industry as the “Dean of Valuation”.

In this episode we cover:

How Aswath introduces students to valuation at NYU
Key concepts of valuation including: price v value, the four drivers of valuation, and probabilistic margins of safety
How Aswath advises beginners to approach valuation
Growth in Big Tech and how Aswath thinks about valuing the Magnificent 7
How inflation and interest rates can affect valuation
… and so much more

Want to ask a question or join us on the podcast, hit us up via our website.

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