The Dark Side of Value Investing: Practical Lessons from Aswath Damodaran, Excess Returns Podcast

This is an episode of the Excess Returns Podcast with Matt Zeigler and me. We go over the highlights from our two interviews with Professor Aswath Damodaran.

Lots of wisdom in one full hour, enjoy!

Join Matt Zeigler and Bogumil Baranowski as they play our favorite clips from both the Excess Returns and Talking Billions podcast interviews with Aswath Damodaran. This conversation unpacks Damodaran’s timeless insights on navigating uncertainty, embracing the process of investing, and finding comfort in a volatile market. From the ritualistic allure of the Berkshire Hathaway meeting to the pitfalls of factor investing,
Main Topics Covered:
The dangers of rigid, ritualistic value investing and the Berkshire Hathaway meeting’s cult-like atmosphere, contrasted with its networking value.
Embracing uncertainty as a feature of investing, not a bug, and avoiding unhealthy coping mechanisms like denial or outsourcing.
The limitations of factor investing, emphasizing the need to bring unique value to the table to achieve excess returns.
The stock market as a reflection of real-world business value, not a place where money is made, and the futility of fighting market dynamics.
The importance of loving the investing process over obsessing about beating the market, with diversification as a safeguard against hubris.
Balancing comfort investments with high-risk, high-reward opportunities to build a resilient portfolio.
The rise of passive investing and its potential to create opportunities for active investors as fewer people seek market mistakes.
The "sleep test" for investors—framing choices with gratitude and perspective to maintain peace of mind.
00:00:00 – Introduction and Damodaran’s view on contempt in investing
00:01:00 – Matt and Bogumil introduce the episode and their admiration for Damodaran
00:03:00 – Why the Berkshire Hathaway meeting terrifies Damodaran
00:11:42 – Uncertainty as a feature, not a bug, in investing
00:21:02 – The shortcomings of factor investing and the need to bring value
00:31:01 – The market as the boss and the importance of staying detached
00:38:22 – Loving the investing process over beating the market
00:44:05 – Comfort investments vs. edge opportunities in portfolio construction
00:52:50 – Active investing as bad plumbing and the rise of passive investing
01:01:12 – The sleep test: Framing investments for peace of mind
01:06:48 – Closing remarks and where to find more from Bogumil and MattPodcast Program – Disclosure Statement

Blue Infinitas Capital, LLC is a registered investment adviser and the opinions expressed by the Firm’s employees and podcast guests on this show are their own and do not reflect the opinions of Blue Infinitas Capital, LLC. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice.

Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed.

Information expressed does not take into account your specific situation or objectives, and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance.