Value Investing in a Magnificent Seven Dominated World | Aswath Damodaran

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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[sycamoreriver]

I've never commented on a YouTube video before, but this time I have to. You guys just had an amazing session with Prof. Damodaran. I learned a lot from every answer he gave. Keep up the good work!

[stephenh]

What an extraordinary intellect! I could listen to Prof. Damodaran for hours. Especially love his direct manner.

[foresthill]

Geez, how is every second sentence out of his mouth a quote? Wisdom just pours out of him. Amazing guy!

[paulaallen]

As an active investor for 40+years, this interview is pure gold. One of the best.

[mgowhar]

That dog in the BG slept like a good baby for more than an hour. A few twists and turns but zero interruptions. Very well mannered! Kids like that would be a treat.

[CameronFussner]

Sometimes Protecting your capital is much more important than making money. Basically because if you lose your capital, making money is much harder. ''Missing the train'' vs. ''losing your money''. There are a lot of trains, but if your money is gone, it's over.

[zarifhassan]

What a wonderful soul Aswath Damodaran is! His life philosophy replicates his valuation philosophy which made him more authentic

[bondhuami]

Such a fabulous and insightful commentary by Prof. Damodaran. It seemed like few minutes for the 1 hour video. Words of wisdom and knowledge from the amazing man.

[ethelbertt]

There are a lot of companies out there that can power through recession and hardship periods, I'm just a fan of buying into moat heavy, cash flow grantors, buy on dips, and add as they drop, and enjoy the bull markets when they happen.

[bananaskin]

I like what he said. And his educated humility. Observe, respond, and cross your fingers. And don't forget your day job (that includes the organics around you), and disposable income. Good stuff. Thank you.

[RickWatson-xugw]

I've just begun learning about value investing, and I've found that many good stocks are undervalued despite their intrinsic value. If you had quarter of a million to create a strong portfolio, which stocks would you choose for better returns?

[jeffreyharrison]

Loved this episode! Just subscribed here and purchased 2 of his books! Fascinating gentleman

[bhaskartripathi]

The professor's talk is so mesmerizing with such an out of box thinking!

[anandp]

Excellent interview. Just ordered his book as I heard this.

[trainingwood]

Mr. Aswath is a genius I really enjoyed this podcast, brilliant.

[WhaleEye-re]

He is SO RIGHT about the value investing cult that exists around Berkshire and the like. It's the same with the Bogleheads forum. I once tried to post something on the Bogleheads forum that the moderator disagreed with and she refused to post it because she said she didn't like my email address name.

[magicbus]

Fantastic interview. I love the insight Aswath offers about spending less time consuming data and information and spend more time thinking and observing the world we live in. Thanks

[ajits]

Pure wisdom. Thanks for uploading this video.

[Snair]

This video was splendid! I have been watching Prof's other videos lately associated with his book but this one stood out. Questions were good and I think it drove to bring out some extraordinary wisdom from him. Great job and truly insightful.

[defnesh.]

When I see "Aswath Damodaran" in a title, I Watch! Great interview. Subscribed!