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Focus on Company Value, not Macro Forecasting
Macro forecasting is unreliable and accomplishes little in terms of substance, only providing a false sense of control. The key to successful investing lies in finding companies where there is a disconnect between your assessment and the market consensus. By focusing on companies with a valuation mismatch and selecting those with potential for growth or improvement, investors can gain an edge in picking stocks and performing well in the market.
On today’s episode, Clay Finck is joined by Aswath Damodaran who is widely referred to as the dean of valuation.
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.
01:42 - Whether recent technological advances should lead us to think about investing. differently than in years past.
03:23 - The role intangible assets play into valuation.
07:08 - How he determines which companies he wants to dive in and research.
14:40 - How Aswath thinks about setting an appropriate discount rate in valuation.
20:49 - His thoughts on whether investors should deem the US treasury rate as the risk free rate available to investors.
24:10 - The future expected return of the S&P 500 implied by the market as of August 2023.
27:29 - How Aswath thinks about the risks of investing in China.
30:02 - Aswath’s updated views on the valuation of Nvidia & Meta.
33:21 - The potential dangers of a buy and hold approach.
47:31 - How to think about using adjusted EBITDA in stock analysis.
49:44 - How Aswath thinks of the macro.
57:16 - Why Aswath recommends a strong understanding of statistics to invest well.
Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.
BOOKS AND RESOURCES
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