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Rebecca Hotsko chats with @AswathDamodaranonValuation. In this episode, they discuss the importance of having an investment philosophy and how to figure out what your investment philosophy is, the difference between having an investment philosophy and strategy, why Aswath believes it’s better to be a generalist than a specialist in one area of investing, and much, much more!
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 and has taught thousands of students how to value companies and pick stocks.
IN THIS EPISODE, YOU’LL LEARN:
00:00:00 - Intro
00:02:05 - The importance of having an investment philosophy and how to figure out what your investment philosophy is
00:03:53 - The difference between having an investment philosophy and strategy
00:07:33 - Why Aswath believes it’s better to be a generalist than a specialist in one area of investing
00:10:54 - An example of what a growth investor’s investment philosophy may be, such as famous growth investor Peter Lynch
00:14:00 - What are value drivers and how to apply them in our valuation process
00:14:23 - The 5 basic variables we need to value any business
00:19:42 - How to convert these value drivers into a DCF or intrinsic value model
00:22:04 - The most common mistakes investors make when valuing a company and how to avoid these
00:23:41 - Aswath’s test on how to figure out if your growth rate is reasonable
00:25:20 - How to figure out what discount rate we should use
00:32:18 - Why Aswath doesn’t believe in a “hold forever mentality” of stocks in a value investing approach
00:33:57 - How often we should revisit our valuations for companies
00:50:50 - How do companies get on Aswath’s radar?
🎧 Listen to our episodes here: https://open.spotify.com/show/7dnn22EWyo6MLsPaR492BM
🖊️ Access our free show notes and transcript here: https://www.theinvestorspodcast.com/millennial-investing/stock-valuation-masterclass/
▶️ RELATED EPISODES:
- (MI226) Investing in Small Cap Stocks w/ Rayna Lesser Hannaway: https://open.spotify.com/episode/0KwdfhE53o3xiOjtk47TIE
💡 OTHER RESOURCES
- Connect with Aswath: https://twitter.com/AswathDamodaran/
- Check out Aswath’s Website: https://pages.stern.nyu.edu/~adamodar/
- Seeking Alpha is a crowd-sourced content service for financial markets. Take control of your financial future — Use our link here for a 14-day free trial: https://www.sahg6dtr.com/59QC8Z/R74QP/
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WHO I AM:
I’m Rebecca Hotsko, an investor and entrepreneur 💼 based in Canada; co-founder of a luxury boat ⛵ sharing club in Kelowna, British Columbia. I graduated from the University of Saskatchewan with a bachelor’s degree 🎓 in Economics and completed CFA level I and II. I gained valuable experience working as an analyst for the Bank of Canada 🏦, the federal energy regulator and in investment management. My passion for teaching others how to invest using time-tested strategies backed by empirical data led me to create an investing blog 💻 in 2020.
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GET IN TOUCH WITH ME 💬:
I’d love to hear from you! Send me a tweet 🐦 directly at https://twitter.com/rebecca_hotsko if you’d like to have a quick exchange of thoughts!
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❗ DISCLAIMER: This show is for entertainment purposes only. Before making any decisions consult a professional. This show is copyrighted by The Investor’s Podcast Network. Written permission must be granted before syndication or rebroadcasting.