Aswath Damodaran: “Valuation: Four Lessons to Take Away” | Talks at Google

The tools and practice of valuation is intimidating to most laymen, who assume that they do not have the skills and the capability to value companies. In this talk, I propose to lay out four simple propositions about valuation. The first is that valuation is not an extension of accounting, insofar as it is not about recording the past but forecasting the future. The second is that valuation is not just modeling, where people put numbers into Excel spreadsheets and pump out values. A good valuation requires a narrative that binds the numbers together. The third is that valuing an asset or business is very different from pricing that asset or business, a difference that is often blurred in practice. The fourth is that luck plays a disproportionate role in whether you make money off your valuations. Put differently, you can do everything right and still walk away with nothing or worse at the end.

About the Author
I view myself, first and foremost, as a teacher. I do teach valuation and corporate finance not only to MBAs at Stern but to anyone who will listen (on iTunes U, online and on YouTube). I love to write books, teaching material and blog posts. After 30 years of teaching finance, I still find it fascinating as an interplay of economics, psychology and number crunching.

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20 comments

  1. Raymond McDonald says:

    I appreciate the clear and direct language. "And let's be completely clear about this. Goodwill is the most useless asset known to man. And here's why…" Unequivocating. Unambiguous. Willing to break with Warren Buffet's Coca-Cola brand example which is decreasingly valuable. Thank you.

  2. Float Circuit says:

    Says China. > gets the girl <

  3. pierre njeim says:

    Can anyone tel me what Aswath means by "the market is paying 100$ per user"? What does this 100$ stand for?

  4. Anjali Gupta says:

    Thank you for watching the video! Now you can also meet Prof. Ashwath and learn from the Masterguru himself !! He will discuss about Business Valuation in a 2-Days Intensive Training. Share your e-mail id and I will mail you the details.

  5. Christopher Okhravi says:

    Incredibly interesting. Thank you very much 🙂

  6. availabilityavailabl says:

    wow a great teacher

  7. Ashish Vaishnav says:

    After an MBA in Finance, and 13 yrs in the Industry – Best Learning Experience. Thank you for putting it up on the web…

  8. Rachid Oubarrahou says:

    I think the way of proposing a single price for a company is wrong. You can have more precisions on the following link: https://myfinancialstocks.blogspot.com/2017/09/a-new-way-of-approaching-discounted.html

  9. Ryan Thornburg says:

    Twitter has moved between $15 – $18 for the past 18 months. Impressive

  10. rodriguez777ace says:

    Aswath is smart, Aswath doesn't use a hammer to do surgey 10:21, be more like Aswath

  11. Derrick Landers says:

    The Ben Graham book may have been boring to him, but it's principles are time proven. Warren Buffet is no fool and probably has multiple quants doing this type of analysis just because…I can appreciate his candor though.

  12. Ashfaq Sheikh says:

    Very impressive. I learned a lot. Thanks Mr. Damodaran.

  13. paraa sakthivel says:

    twitter at 18

  14. Wamuyu Gatheru says:

    Wow. Lucky people who have been taught by this interesting and knowledgable man!

  15. Alan Nguyen says:

    LOL Damodaran was right about Twitter

  16. vincent g says:

    Great speech!

  17. Ramardy Smith says:

    Wow! What an awesome professor. Valuation vs pricing… Awesomeness in action….

  18. MrSupernova111 says:

    Amazing presentation! Does Damodaran do talks around the country? I would love to attend one.

  19. Oliver Loi says:

    Thanks Aswath

  20. sachin saini says:

    brilliant stuff my first video of his!