Aswath Damodaran At CFA Conference – Numbers and Narratives: Modeling, Storytelling, and Investing

Aswath Damodaran  At CFA Conference – Numbers and Narratives: Modeling, Storytelling, and Investing
Image source: CNBC Video Screenshot

Aswath Damodaran
Professor of Finance and David Margolis Teaching Fellow
Leonard N. Stern School of Business, New York University at CFA Institute Conference: Equity Research and Valuation 2014

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“Let’s retire the argument that some companies cannot be valued. It’s true that rigid cash flow-based models will not work with [young or start-up] companies where ‘promise and potential’ are what’s driving value, but staying with just the narrative exposes you to significant risks.” —Aswath Damodaran

  • The trifecta of illusions that go with pure numbers-based models (illusion of precision, illusion of objectivity, and illusion of control) and how to avoid the creation of businesses that exist only in spreadsheet nirvana
  • Appropriate narratives for valuing business and how to test the narrative against history, experience, and common sense
  • Examples of converting the narratives into key drivers of value and connecting these key drivers to a company’s valuation

Also see Aswath Damodaran: Valuation Tools Webcast [PART 14]

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