GM67: Successful Investing in a Disrupted World ft. Aswath Damodaran

Top Traders Unplugged

Aswath Damodaran, Professor of Finance at NYU Stern and a leading expert on valuation and corporate finance joins Alan Dunne in this episode for a fascinating and thought-provoking discussion on current markets and investing in general. They explore why Aswath believes we have witnessed the death of old-school value investing and how structural shifts in the economy have fundamentally altered the investing landscape. The discussion delves into the valuation of Nvidia and the Mag 7, questioning whether the hype around AI is justified. Aswath outlines his approach for long-term valuation, explains how he estimates the equity risk premium, and discusses what the current equity risk premium suggests for long-term equity market returns. They also cover the importance of bond yields for valuation, the shortcomings of P/E as a valuation measure, and whether assets without cash flows, like gold and crypto, can be valued. The episode wraps up with Aswath’s advice for becoming a better investor and preparing for an AI-driven future.

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Episode TimeStamps:

02:18 - Introduction to Aswath Damodaran

03:30 - Nvidia - bullish or bearish?

04:47 - How AI will impact the economy

10:48 - How to make better valuations in AI and technology stocks

14:36 - How to distinguish AI stocks from each other

17:58 - A sticky market

22:40 - How should you act to the AI boom as an investor?

31:07 - Are value investor becoming obsolete?

35:49 - What is the equity risk premium?

40:28 - How much equity risk premium is enough?

45:08 - Dealing with macro shocks and timing the markets

50:01 - Inflation and its impact on stocks

51:51 - Don't rely on the P/E ratio alone

53:08 - The link between GDP and earnings

54:31 - The importance of investing globally

57:35 - Can assets with no cash flows be valued?

58:27 - Managing the risk

01:01:56 - Advice for other investors

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