Aswath Damodaran - Making Sense of the Market - [Invest Like the Best, EP. 279]

My guest today is Aswath Damodaran , a Professor of Finance at NYU’s Stern School of Business. Aswath is one of the clearest teachers of investing and finance in our industry and through his blog, books, and YouTube has open-sourced his wisdom for decades. This conversation is a masterclass of key investing concepts. We discuss inflation, narratives, disruption, the evolution of alpha and edge, and his thoughts on ESG. Please enjoy this great conversation with Aswath Damodaran. For the full show notes, transcript, and links to mentioned content, check out the episode page here . ----- This episode is brought to you by Canalyst. Canalyst is the leading destination for public company data and analysis. If you're a professional equity investor and haven't talked to Canalyst recently, you should give them a shout. Learn more and try Canalyst for yourself at canalyst.com/Patrick . ----- This episode is brought to you by Brex. Brex is the integrated financial platform trusted by the world's most innovative entrepreneurs and fastest-growing companies. With Brex, you can move money fast for instant impact with high-limit corporate cards, payments, venture debt, and spend management software all in one place. Ready to accelerate your business? Learn more at brex.com/best . ----- Invest Like the Best is a property of Colossus, LLC. For more episodes of Invest Like the Best, visit joincolossus.com/episodes . Past guests include Kevin Systrom , Mike Krieger , John Collison , Kat Cole , Marc Andreessen , Matthew Ball , Bill Gurley , Anu Hariharan , Ben Thompson , and many more. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here . Follow us on Twitter: @patrick_oshag | @JoinColossus Show Notes [00:02:43] - [First question] - How he thinks about inflation as a now dominant force [00:04:33] - Why inflation is so important across the spectrum [00:09:02] - Big lessons from other periods of historically high inflation writ large [00:10:45] - Reasons why equities as an asset class struggle in high inflation environments [00:15:21] - The relationship betweens goods versus services in times of high inflation [00:16:59] - Broader economic implications especially for income inequality [00:19:03] - The Fed taking inflation seriously now when they didn’t and thoughts on the policy response to today’s situation [00:21:05] - How smart companies are defensively adjusting to inflation [00:27:46] - The importance of a capital allocation skill-set for executive team members [00:29:32] - Further historic lessons and how he’s being defensive against inflation [00:33:09] - Lessons learned about Amazon valuing them every year since their inception [00:42:25] - Whenever he sees Thanos in the Avengers he thinks of Amazon [00:44:51] - Thoughts on Facebook, Apple and Microsoft [00:48:26] - The evolution of edge and the search for alpha [00:54:37] - Whether or not there’s utility in studying other investors [00:57:16] - Skill versus luck and the most common valuation mistakes he’s made [00:59:09] - Assuming long-term growth rates and changing company life cycles [01:02:02] - Momentum and Value investing in today’s market [01:07:24] - Differences between interest rates and discount rates in regards to inflation [01:12:00] - How today’s market affects early stage equity investment [01:14:36] - The growing popularity of ESG and his seemingly contrarian view on it [01:24:03] - Nature of disruption as a force and companies that are protected from it [01:28:24] - Assigning a disruption risk premium when valuing companies [01:32:52] - What he makes of Elon Musk buying Twitter [01:34:24] - Other major topics he has a divergent view on [01:38:37] - Narrative And Numbers ; The kindest thing anyone has ever done for him [01:38:55] - Teaching with a goal of changing mindsets