In this episode of Excess Returns, we sat down with NYU professor Aswath Damodaran to discuss his new book on the corporate life cycle and get his insights on a wide range of investing topics.
We cover:
- How companies age and why they struggle to act their age
- The importance of storytelling in valuation
- Aswath's thoughts on factor investing and its limitations
- The rise of passive investing and its impact on markets
- Market concentration and the dominance of big tech companies
- How Aswath approaches his own investing decisions
- The potential impact of AI on investing and valuation
- Why Aswath has never attended the Berkshire Hathaway annual meeting
Aswath shares his unique perspectives on these topics, blending academic rigor with practical insights. He also offers his advice for the average investor, emphasizing the importance of focusing on preserving and growing wealth rather than chasing outsized returns.
Whether you're a seasoned investor or just getting started, this wide-ranging conversation offers valuable food for thought on navigating today's complex markets. We hope you enjoy this discussion as much as we did!
0:00 - Introduction to Aswath Damodaran
1:11 - Discussion of Damodaran's new book on the corporate life cycle
4:00 - The importance of storytelling in valuation
7:38 - Examples using Intel and Starbucks
10:14 - Building a business model and the changing skills needed across a company's lifecycle
15:47 - The problem with the concept of a "great CEO"
19:51 - The relationship between narrative and reality in company valuation
23:43 - Value investing and Berkshire Hathaway's annual meeting
26:35 - The dangers of dogma in investing
27:47 - Combating confirmation bias in investing
32:08 - Views on factor investing
40:10 - Market concentration and the dominance of big tech companies
46:58 - The rise of passive investing and its impact on the market
54:00 - Damodaran's approach to his own investing decisions
59:41 - The impact of AI on investing and valuation
1:05:26 - The importance of human insight and creativity in investing
1:06:39 - Damodaran's one key lesson for the average investor
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