ValueTalks With Professor Aswath Damodaran – What Do You Do If You Get Right Too Quickly?

Today is a very special episode with one of my all time favorites, Professor Aswath Damodaran. He teaches Corporate Finance and Valuation at the Stern School of Business at New York University. In this episode we discuss many topics with an emphasis on what makes a good investor and the need to be honest with yourself.

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Q1 hedge fund letters, conference, scoops etc, Also read Lear Capital: Financial Products You Should Avoid?

Warren Buffett: If You Own A Good Business, Keep It

Berkshire Hathaway Warren BuffettBuying private businesses is easier than acquiring public firms, and investors should avoid selling good investments at all costs, according to the Oracle of Omaha, Warren Buffett. Q2 2020 hedge fund letters, conferences and more In an interview with CNBC in March 2013, Buffett was asked if he was looking at any businesses, in particular, Read More

RP: “How would you define skill in investing?”

Professor Aswath Damodaran: “I couldn’t because I really don’t know. Because there is no such thing. This is not tennis or basketball where you go out and practice everyday, your going to get better. This is really learning to live with yourself as a person. That to me is the essence of being a good investor. It is learning what makes you tick. Stop reading books about Warren Buffet, Peter Lynch, and great investors. There is nothing, zero that you will get out of it of those books that’s going to make you a better investor. The key to being a better investor is you need to know yourself. You need to know what makes you tick. What makes you unhappy? What makes you impatient? Those are the things you need to work with. You need to find an investment philosophy that best fits you as a person. That is really the key to being a successful investor is finding a philosophy that fits you like a glove.”

RP: “Closing thoughts”

Professor Aswath Damodaran: “My closing thoughts, nothing profound, do no harm are the words I used earlier. When you think about investing do no harm. Don’t do rash things. Don’t let hubris take the better of you. Don’t invest because you expect to get rewarded for doing the right things. Don’t be righteous. Don’t say I did all the right things therefore I should be rewarded. There is no such I should be. I mean you might be, you might not be. Markets are fickle. They might reward you for doing the right things. Invest because you truly enjoy investing.”

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Previous issue of ValueTalks with Neils Jensen of Absolute Return Partners and author of a new book The End of Indexing: Six Structural Mega-Trends That Threaten Passive Investing”.

1:23 – Can you tell me about your background and what led you to finance and teaching?

1:44 – You recently came out with the 3rd edition of the “Dark Side of Valuation”, can you tell me the new updates?

3:46 – Should investors be afraid of uncertainty or embrace it?

4:45 – What are the core principles in determining intrinsic value?

6:51 – There is a chapter that I liked that talked about the difference between valuing and pricing, between an investor and a trader, can you talk about that?

8:47 – How should beginning investors or people in the profession stay honest and stay consistent with what they doing and within their process?

12:03 – How would you define skill in investing?

14:23 – What would your advice be for the millennials surrounded by all these financial products?

17:42 – Can you tell me more about your decision process (value relative to price)?

21:25 – What about when investors say let them ride?

25:05 – What are your views on factor based investing?

28:18 – Can valuation be automated?

32:10 – What are your views on short selling?

39:40 – How should beginning investors should view investing and preserving their worth?

44:19 – What are your favorite books?

48:06 – What are your hobbies?

Enjoy and thanks for the listen!