Professor Aswath Damodaran on AI, Valuation, Life, Teaching, NVIDIA, History, Books and more

I had the opportunity to speak with Professor Aswath Damodaran, in my opinion, the teacher with the biggest impact in the field of finance and valuation. I deeply admire his work and he has significantly influenced my life. I hope that you enjoy this conversation. Was I nervous? Absolutely. Did I enjoy it? Every single second.
For anyone with interest in Finance / Valuation, I highly recommend his content.
Professor Aswath Damodaran's channel: ‪@AswathDamodaranonValuation‬
Blog: aswathdamodaran.blogspot.com/
Website: pages.stern.nyu.edu/~adamodar/
Support the channel via the links below:
Paypal: www.paypal.com/donate?hosted_...
Buy me a coffee: www.buymeacoffee.com/Kostadin
Patreon: / kostadin
Timestamps:
0:00 Introduction
1:21 What motivated you to teach?
3:50 If you weren't a teacher, what would you do?
4:53 Advice for storytellers / number crunchers
7:42 Advice for parents
8:45 Questions from relatives
10:22 Respectfully disagreeing
12:20 NVIDIA
13:18 Does having more information makes investing easier?
17:57 Gas emission cheating device
19:40 Contrarian investing
24:00 What company surprised you the most?
24:40 NVIDIA, mature and growth companies
28:54 Levi's
30:46 Professor Damodaran's portfolio
31:01 Is diversification for idiots
33:50 AI
39:09 Tesla
41:02 Twitter
43:58 Most common misconception in valuation
44:44 Worst mistakes professionals make
47:27 Looking back on his career
51:38 Advice for young finance professionals
54:14 A Day in the Life of Professor Damodaran
1:00:35 Favorite books
1:03:27 Fear, Greed, Reddit
1:04:28 Final words

[@kostadin_ristovski]

Was I nervous? Absolutely! Did I enjoy it? Every second of it. P.S. Professor's camera was out of focus/blurry during some parts of the conversation, so there are minor edits on that side of the screen, for the full video to be fully enjoyable. All of the audio is perfect, so all the wisdom is there.

[@BoonTee]

Yes it is the content that is most important. And sound quality is much more important than video quality

[@ibrahimciftci9599]

Wow you just interviewed the GOAT

[@kostadin_ristovski]

I share the same opinion :)

[@lucianocalia4470]

While I was listening to this interview, I had the insight that it is comparable to a miracle to have one of the most influential thinkers in modern finance that has the lucidity and aptitude of an oriental mystic.

[@kostadin_ristovski]

There's definitely a lot of wisdom acquired over time.

[@askme78232]

Excellent characterization. He is very Asian indeed, he believes in educating the young at any age,

[@neihgnot8320]

It's interesting to see the miscommunications that happened in this conversation. Kostadin you did a good job taking it in stride. Fairly even keeled

[@kostadin_ristovski]

I am glad you enjoyed the conversation, thank you for the comment.

[@markuskeller2986]

Great! Thanks to both! 👍🏻

[@kostadin_ristovski]

I hope you enjoy the conversation Markus.

[@jonp3674]

Great interview, such an awesome guest. On the subject of Tesla he was saying that Tesla can't maintain a 60% market share in electric vehicles, and that's true and I think also irrelevant. Imo the whole vehicle market is going to go 100% electric and Tesla might take a 10-20% global share of that. So yes their share falls over time but their absolute numbers will grow massively, into the 10-20 million a year range, while they do.

[@kostadin_ristovski]

Thanks Jon, glad you enjoyed it. As for Tesla, it is definitely doable to get to 10-20%, but there's also a chance that they stay at the 5% range. Here's the overview of the market share in 2022: www.statista.com/statistics/316786/global-market-share-of-the-leading-automakers/ As you can see, there's only 1 company with market share above 10% and that's not far from theere. So, estimating 20%, could be a stretch.

[@yabadabadude5124]

Wow! That was really good! Thank you Kostadin and Prof. Damodaran!

[@kostadin_ristovski]

I am glad you enjoyed the conversation.

[@josequesada1234]

This is one of your most valuable videos. Thank you for the insightful interview and amazing guest.

[@kostadin_ristovski]

I appreciate your kind words Jose!

[@diogopereira7531]

This is awesome Kosta. Thank you for this, great work. Cheers from Portugal

[@kostadin_ristovski]

Thank you Diogo!

[@BoonTee]

Great interview Kostadin! Really like all the questions that you asked Prof Damodaran!

[@kostadin_ristovski]

I am glad you enjoyed the conversation, and thank you for the feedback.

[@mcawesome4150]

Wow, never expected this interview here, well done!

[@kostadin_ristovski]

Me neither! Thank you :)

[@cashflowyield]

excellent discussion, thank you!

[@kostadin_ristovski]

You are welcome!

[@madhut2558]

Great conversation, as you said we appreciate every second of the interview..

[@kostadin_ristovski]

I am glad you enjoyed the converstaion Madhu :)

[@andrejvangelski4514]

Great job on the interview Kosta, and congrats! 🍻🎉

[@kostadin_ristovski]

Thank you Andrej!

[@InversorTotal]

Thanks to both. In my opinion, diversification has another good quality that I never hear. Market could recognize value or exced it for one stock and not for other one. Then you can rebalance it properly. Or during market cicles, there are panick moments where some stocks behave better, so you can sell those to buy the bargain in other. Although, too much diversification is not good because you are not able to properly track them

[@kostadin_ristovski]

This seems to be another topic where everyone needs to find what works best for them. I do agree with you that diversification to the point when one is not able to track the holdings, can be harmful.

[@askme78232]

Excellent content. This interviewee is very generous with his wisdom.

[@kostadin_ristovski]

Thank you, I am glad you enjoyed the conversation :)

[@johnsuckher3037]

that's big!

[@kostadin_ristovski]

Absolutely, I'm extremely grateful for his time.

[@DavidSmith-do6ji]

Wow! 20.30min that has been me in the past!

[@kostadin_ristovski]

I have heard that from multiple viewers now ☺️

[@boratsmagadijev940]

Great job kid!

[@kostadin_ristovski]

Thanks!

[@marcwhite6267]

That's the most schitzophrenic books selection I've ever seen on the shelf : The Intelligent Investor standing side by side with Das Capital. Like keeping the Bible and Darwin's books on the same shelf. Blasphemy! P.S. Superb interview!

[@kostadin_ristovski]

You have a good eye for detail, well done for noticing that pair next to one another. I do like to read a lot and I find some beauty in reading diverse books, especially ones with opposing views :) There are plenty of other books that some would be surprised that I have at home. P.S. I am glad you enjoyed the conversation.

[@marcwhite6267]

@@kostadin_ristovski Das Capital is a more ideologically-formulated version of Grundrisse. The latter is Marx par excellence.

[@kostadin_ristovski]

@@marcwhite6267 Certain books have stood the test of time for a reason.

[@altairjb]

On the data side, i am not very happy with simple averages. I calculate confidence intervals for different metrics of different time periods. For some companies, thd distributions are very insightful.

[@kostadin_ristovski]

There are a lot of tools to use nowadays, that's for sure.

[@fashionman998899]

I'm not so surprised by this because Kostadin has proven himself during this latest pullback and market recovery.

[@kostadin_ristovski]

I appreciate your kind words. By the way, I don't think I have proven anything. In addition, that is also not the goal of this channel. I want this to be seen as a mainly educational channel and I'll do my best in that regard.

[@aungphyonaing]

Hey Kosta, why don’t you also make a live Q and A or recorded ones at some points for us? We got questions for you as well. (Maybe like monthly random questions)?

[@kostadin_ristovski]

Hey Aung, thank you for the suggestion, that is a good idea! I will note it down.

[@altairjb]

I agree on the diversification. I also own about 35 to 40 companies and i feel super comfortable with that. Peter Lynch had a huge number of companies as well. I believe Charlie Munger has also endorsed the idiots comment.

[@altairjb]

Indeed, he has. Munger is Munger, he says whatever he wants. In one of the interviews, he said 3 investments could be all you need, Berkshire, Costco and Li Lu fund.

[@kostadin_ristovski]

There are a few who argued that concentrated portfolio is better, including Charlie Munger and Mark Cuban. I do find that a bit arrogant, but that's their style.

[@Itay569]

Munger and buffet had major and consistent success for more than seven decades with concentrated portfolios. It is silly to call that arrogant in favor of a strategy almost no one succeeded beating the market with (diversified portfolios). It is understandable for people that invest in businesses without having a strong understanding of future cashflow and don't employ a significant margin of safety to diversify with 30+ companies but it is unlikely they will beat the markets that way There are exceptions like peter lynch that invested like that and had success but most of the investing legends had concentrated portfolios

[@kostadin_ristovski]

​@@Itay569 I think we can agree to disagree on some topics. Success can come in many forms, both in diversified and concentrated portfolios. Also, don't forget that Berkshire Hathaway has roughly 50 positions in their portfolio.

[@Itay569]

@kostadin_ristovski Absolutely. Meant no disrespect, and I enjoyed the interview Regarding berkshire, notice that about 10% (small bets) are the portfolios of ted and todd. Of the other 90%, 88% is in 6 companies. Historically, when Buffet found an investment with a strong margin of safety, he routinely employed 40% (Coca-Cola, american Express, geico, apple, ...) of the public portfolio On the other hand, the public portfolio is only a part of the assets, so they do have diversification

[@davidcherve]

Do you know if someone ever asked Damodaran whether he would be a fund manager/professional investor?

[@kostadin_ristovski]

As far as I know, he wasn't asked that question before. He has a passion for teaching and that's what he enjoys doing. Taking into account his knowledge and experience, I would not be surprised if he has been asked to take on such a role many times.

[@davidcherve]

@@kostadin_ristovski I would definitely invest under his vehicle, if he ever did one.

[@altairjb]

AI is just the trendy buzzword of the moment. Blockchain was the one 2 years ago. I saw someone on YT saying an 8% perpetual rate for PLTR is conservative. The emotions of the market. Who cares? Those who don't have a strategy and don't know how to have one. I will let it play out. NVDA price is ridiculous at the moment. That's the best gauge to the market emotion on AI.

[@kostadin_ristovski]

AI is definitely changing the world. I do think there will be ridiculously unreasonable prices of certain companies, but we will see big winners in 5-10 years, for sure. Whether Nvidia will be one, that's to be seen.

[@altairjb]

Ah, my strategy was put on blast... I love selling my puts and i have been doing it for 3 years with success. The catastrophe is still down the line, it seems. Love hearing others' perspectives, but i am so comfortable with my strategy that i am not changing it. I believe the probability of getting a big loss is low given the companies i sell puts on. Well, i know Enron was big... I will keep taking this risk though. Current put contracts on PYPL, A, and CVS. Could any any of these go to 0? They could, max loss of 10k or so with A, which is still lower than my gains in the last 3 years. That's why I don't see the strategy as a huge risk.

[@kostadin_ristovski]

I think it is important that the strategy suits you while you're aware of both the good and the bad.

[@altairjb]

Absolutely. And this is sort of a long term experiment if I am honest. I only sell puts in one of my accounts. It's one that has seen no contributions since 2020, and unless one options trade goes wrong down the line, i don't plan on adding more money. Yet, i keep adding long positions as i sell puts. The number of shares i own is significantly higher than in 2020. Would i recommend this to everyone? No. I started tinkering with this strategy with "cheap" stocks (where a trade gone wrong would not ruin everything) and would never open more than one options trade. Nowadays, i usually keep 3 options contracts at any given moment. And the mindset is always the same. Were one of the trades to go against me, am i ready and willing to get those shares? Absolutely. Most of the time my strikes are so low that the fear of the trade is not even a factor.

[@altairjb]

It's a bit of a learning experience and not excluding any strategy without even giving it any thought.

[@radlink14]

Would you mind sharing where did you get educated on how puts works? I haven’t been able to find something that I can consume and understand.

[@altairjb]

@@radlink14 there are a few good places online. If you look carefully, you'll find them. Avoid hype KZbinrs and you will likely be on the right track :) it's simpler than it may look. But it's not without risks as I said. Right now I have puts open on A, PYPL and TGT. Only A is in the green. Am I concerned? No, but I have been doing this for a while and right now, I will be shocked if I am assigned either PYPL or TGT. If I am, I am fine though. My best advice. Don't rush. Read about it. Avoid videos.