Adapt to Change to Find Advantage

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The investment landscape has evolved, and the historical outperformance of low-value stocks has diminished. In the previous century, low PE and low price-to-book stocks consistently exceeded high-value stock returns. However, the last three decades have shown a shift, with growth stocks, particularly those from major tech companies, dominating. Expecting mean reversion in low-P stocks to yield profitable opportunities is no longer viable, as technological advancements, such as AI, have made these strategies widely accessible. If machines can identify such investment opportunities easily, achieving excess returns through them becomes increasingly unlikely.

On today’s episode, Clay Finck is joined by Aswath Damodaran to discuss his new book, The Corporate Life Cycle.

Aswath Damodaran is a professor at NYU of corporate finance and valuation and has taught thousands of students how to value companies and pick stocks. He has written numerous books on valuation and has also made all of his university courses available online for free. Aswath is one of the clearest teachers of finance and investing in the industry.

IN THIS EPISODE YOU’LL LEARN:

00:00 - Intro

01:48 - What the corporate life cycle is and why it’s important.

01:48 - Why value investors should be open to investing at different points in the life cycle.

09:32 - Why the job of management is to maximize shareholder value.

17:21 - The difference in returns between value and growth investing.

27:44 - How the story and narrative around Tesla has changed over the past decade.

43:02 - How management’s skillset needs to change throughout the corporate life cycle.

50:41 - How companies should handle the decline phase of the life cycle.

58:23 - Why Aswath is against concentrating his portfolio.

And so much more!

Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.

BOOKS AND RESOURCES

Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, Kyle, and the other community members.
Check out Aswath’s new book — The Corporate Life Cycle.
Check out Aswath’s Website.
Check out Aswath’s YouTube Channel.
Mentioned Episode: WSB508: Buffett's Purchase of TSM & Meta "Doomsday" Analysis, or watch the video.
Related Episode: WSB577: Valuation Masterclass w/ Aswath Damodaran, or watch the video.
Related Episode: RWH005: Meet the Master w/ Aswath Damodaran, or watch the video.
Follow Aswath on Twitter.
Follow Clay on Twitter.
Check out all the books mentioned and discussed in our podcast episodes here.
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