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Aswath Damodaran

Aswath Damodaran

I teach corporate finance, valuation and investment philosophies at the Stern School of Business at New York University. I have online versions of all three courses here, as well as other finance-related videos.
1. The Corporate Finance Online playlist has an introductory video and 36 sessions that cover all of corporate finance (at least as I see it).
2. The Valuation playlist has 25 sessions that cover valuation approaches, issues and questions.
3. The Investment Philosophies playlist has sessions that cover different investment philosophies.
4. The Accounting and Statistics playlists reflect my quirky and unorthodox introductions to two disciplines that are critical to my valuation and corporate finance classes.
5. The Blog Posts playlist has sessions that go wit my blog posts and reflect my standing as a dabbler, rather than expert, in all things finance-related.
If you need the supporting material for any of the classes, check the links below.

Links:
Corporate finance materials: http://www.stern.nyu.edu/~adamodar/New_Home_Page/corpfin.html
Valuation materials: http://www.stern.nyu.edu/~adamodar/New_Home_Page/equity.html
Investment Philosophies: http://www.stern.nyu.edu/~adamodar/New_Home_Page/invphil.htm
Books: http://www.stern.nyu.edu/~adamodar/New_Home_Page/public.htm
My website: http://www.damodaran.com

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  • Today · 59 min

    Session 17: The Miller Modigliani Theorem and Financing Hierarchies

    In the shortened session that followed the quiz, I look at the Miller Modigliani theorem through the prism of the debt tradeoff. I then move on to looking at how the cost of capital can be used to optimize the right mix of debt and equity. We will continue with this discussion next week. Until next time! Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr17/session17.pdf Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session17Atest.pdf Learn more about your ad choices. Visit megaphone.fm/adchoices

  • Yesterday · 1 hr 28 min

    Session 2: The Bermuda Triangle and Approaches to Valuation

    Bringing in the effects of uncertainty and complexity, I argued that these three (bias, uncertainty and complexity) forces are the biggest challenges to good valuation.We then moved on to talk about the three basic approaches to valuation: discounted cash flow valuation, where you estimate the intrinsic value of an asset, relative valuation, where you value an asset based on the pricing of similar assets and option pricing valuation, where you apply option pricing to value businesses. With each approach, we talked about the types of assets that are best priced with that approach and what you need to bring as an analyst/investor to the table. For instance, in our discussion of DCF valuation and how to make it work for you, I suggested that there were two requirements: a long time horizon and the capacity to act as the catalyst for market correction. Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/biasshort.pdf Slides Introduction to Valuation: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/ValIntroSpr23.pdf Post class test:https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session2atest.pdf Post class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session2asoln.pdf Learn more about your ad choices. Visit megaphone.fm/adchoices

  • Yesterday · 31 min

    Dissent and Debate: Pushback on my Tesla Valuation!

    Last week, I valued Tesla and arrived at an estimate of value, which at $130 was fairly close to the price then, but looks distant as the stock has run up in the week since. I expected that I would hear back from people who disagreed with me, and I did, on both sides. That disagreement not only does not bother me, but I think is healthy, and I am not in the least bit defensive. But as a teacher, there are learning moments and teaching moments and I look at some of them in this debate, in the context of explaining why I told the story that I did and arrived at the value that I did, in my valuation. I fill in missing pieces in the valuation, and examine the critiques from both Tesla bulls (that my revenues and margins are too low, that I am missing the potential from other businesses and the specialness of the company & its founders) and Tesla bears. I close by noting that I value companies for myself, and that if you are a Tesla bull or a bear, it is not my valuation that you should be worried about, but your own. Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/TeslaPushback2023.pdf Blog Post: https://aswathdamodaran.blogspot.com/2023/02/disagreements-and-first-principles.html Learn more about your ad choices. Visit megaphone.fm/adchoices

  • Saturday · 44 min

    India Rising hits a Roadblock: The Short Selling Threat to the Adani Group!

    The India Rising Story hit a road block last week, when Hindenburg Research, a short seller, labeled the Adani Group, one of India's largest, fastest-rising and most politically connected family groups, as the "largest con" in corporate history. I have no financial or emotional investment in the Adani Group, and in this session, I start by providing a short history of how a obscure, regional family group company became one of India's largest family group companies, commanding a market capitalization in excess of $200 billion at the start of 2022. I trace its growth in revenues from infrastructure businesses, accompanies by slim profits, huge investments and lots of debt. I try to consolidate the Hindenburg critique of the company into three groupings - that it is committing accounting fraud, that it is manipulating stock prices and that Indian institutions (banks, regulators, LIC) are staying on the sidelines. Rather than call it a "big con", I am inclined to believe that this is a company that is exploiting the seams and weaknesses in the India story, from the obsessive focus on control in many of its family groups to the inertia and indifferences at institutions to misplaced priorities at regulators to the dominance of bullish momentum-based trading in markets. I close with a valuation of Adani Enterprises, the Group's holding company, and find it over valued, even after the mark down in prices last week. Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/AdaniShort.pdf Valuation of Adani: https://pages.stern.nyu.edu/~adamodar/pc/blog/Adani2023.xlsx Learn more about your ad choices. Visit megaphone.fm/adchoices

  • Saturday · 23 min

    Valeant: Damaged Goods or Deeply Discounted Drug Company?

    I first valued Valeant in November 2015, after its fall from grace, and concluded that it was not a good investment then, but I did return to it in April 2016 and November 2016, and each time, found it under valued & bought the stock. In March 2017, my investment in the stock has lost 50% of its value. Part of me wants to go into denial (and not look at the stock), part of me wants to sell and never talk about it but I know that for my investment health, I need to take a look at the company and reassess whether it belongs in my portfolio at today's price. I attempt to do so, though it entirely possible that I am letting my delusions get the better of my good sense. Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/ValeatMarch2017.pdf Blog Post: Valuation: http://www.stern.nyu.edu/~adamodar/pc/blog/ValeantMarch2017.xls Learn more about your ad choices. Visit megaphone.fm/adchoices

  • Friday · 21 min

    Data 2017 Update 10: The Pricing Game

    In this session, I complete my discussion of my global data update for 2017 by looking at pricing differences across countries and sectors. Specifically, I look at how PE ratios, PBV ratios, EV to EBITDA and EV to Sales vary across markets. Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/dataupdate10.pdf Blog Post: http://aswathdamodaran.blogspot.com/2017/03/january-2017-data-update-10-pricing-game.html Data on Pricing by Country: http://www.stern.nyu.edu/~adamodar/pc/blog/CountryMultiples2017.xlsx Data on Pricing by Sector: http://www.stern.nyu.edu/~adamodar/pc/blog/SectorMultiples2017.xlsx Learn more about your ad choices. Visit megaphone.fm/adchoices

  • Thursday · 12 min

    Good Companies, Good Managers, Good Investments: Deciphering the Divide

    A good company can be badly managed and a bad company can be well managed. To make things even more confusing, a bad company with inept management can be a good investment. If this all sounds like a riddle to you, try this webcast where I draw the distinction between a good company, a good management and a good investment. Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/goodbad.pdf Blog Post: http://aswathdamodaran.blogspot.com/2017/03/explaining-paradox-why-good-bad.html Learn more about your ad choices. Visit megaphone.fm/adchoices

  • Thursday · 3 hr 20 min

    The Theocratic Trifecta: The Allure and False Promise of ESG, Sustainability and Stakeholder Wealth

    This is not a video that I expect most of you to not watch, for many reasons. First, it is insanely long (more than 3 hours), breaking almost every rule in the online video rulebook. Second, everything that I say in this video, I have said before either in my classes or individual posts. That said, you may still find it useful because it consolidates all the arguments against three ideas that I have seen marketed relentlessly as counters to conventional business first principles, and shows how these concepts connect to each other. 1. Sustainability: It is the business buzzword of the moment, with sustainability centers funded around the idea and classes with it in the title. While I understand the push for sustainable living and a planet, I find the notion of corporate sustainability nonsensical, since corporations are legal entities that should go away, when their reason for existence disappears. 2. Stakeholder Wealth Maximization: Should a well run business consider the needs and interests of the many stakeholders in it (lenders, employees, customers, society)? Of course, but the idea that you can maximize all of their competing interests is an idea that only a law school professor will think is a good one. 3. ESG: No business acronym has ever acquired as large a following as this one, and I have written and talked about the multiple ways in which it can go wrong. My description of ESG as a concept born in sanctimony, nurtured in hypocrisy and sold with sophistry summarizes how I feel about it. I use "Theocratic" to bind these bad ideas together because they have marketed with religious fervor, and the Ayatollahs of the space have used virtue (or their definitions of it) as a defense against arguments. The buy in by consultants (McKinsey, are you listening), academics (who have provided cover and manufactured research to back it up), fund managers (with fiduciary responsibilities) has been astonishing. If you are an ESG advocate, or worse still, actually work in the space, I hope that you do get a chance to watch the session. It may infuriate you, and you may disagree with my arguments, but I don't think you will find it boring. Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/TheoTrifecta.pdf Previous blog posts: 1. https://aswathdamodaran.blogspot.com/2019/08/from-shareholder-wealth-to-stakeholder.html 2. https://aswathdamodaran.blogspot.com/2020/09/sounding-good-or-doing-good-skeptical.html 3. https://aswathdamodaran.blogspot.com/2021/09/the-esg-movement-goodness-gravy-train.html 4. https://aswathdamodaran.blogspot.com/2022/03/esgs-russia-test-moment-to-shine-or.html Learn more about your ad choices. Visit megaphone.fm/adchoices

  • Thursday · 1 hr 29 min

    Session 5: Equity Risk Premiums

    (I apologize for the screen sharing snafu, which is about 12 minutes, between minutes 10 and 22 of the class, since you watch an awfully low res video of me in front of the classroom). In the session today, we started by doing a brief test on country risk premiums. We started with an assessment of historical equity risk premiums, and why they are not good predictors of future equity risk premiums, before embarking on a discussion of country risk and how to deal with it, and measure it. We also looked at company risk exposure to country risk, with my core argument being that a company’s exposure to country risk comes from where it dos business, not where it is incorporated: After a brief foray into lambda, a more composite way of measuring country risk, we spent the rest of the session talking about the dynamics of implied equity risk premiums and what makes them go up, down or stay unchanged. We then moved to cross market comparisons, first by comparing the ERP to bond default spreads, then bringing in real estate risk premiums and then extending the concept to comparing ERPs across countries. Finally, I made the argument that you should not stray too far from the current implied premium, when valuing individual companies, because doing so will make your end valuation a function of what you think about the market and the company. If you have strong views on the market being over valued or under valued, it is best to separate it from your company valuation. I am attaching the excel spreadsheet that I used to compute the implied ERP at the start of February 2023. Play with it when you get a chance. Post class test and solution attached. Until next time! Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/ImplPrem.pdf ERP for February 2023: https://pages.stern.nyu.edu/~adamodar/pc/implprem/ERPFeb23.xlsx Slides: https://www.stern.nyu.edu/~adamodar/podcasts/valspr23/session5slides.pdf Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session5Atest.pdf Post class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session5Asoln.pdf Learn more about your ad choices. Visit megaphone.fm/adchoices

  • Wednesday · 1 hr 28 min

    Session 11: Terminal Value and First Steps on Loose Ends

    In this class we began by looking at the four rules that keep terminal value in check. We then looked at which model to use in valuing a company and then moved on to the loose ends in valuation, items we often pay little heed to or attach arbitrary premiums/discounts for. We began by looking at cash and whether it should command a premium at some companies (if they have a good track record and have restrictions on raising capital) and a discount at others (if investors don't trust you with the cash). We then looked at cross holdings in other companies and the numerous barriers to valuing them. Start of the class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/termvalue.pdf Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valUGspr17/session11.pdf Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session11atest.pdf Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session11asoln.pdf Learn more about your ad choices. Visit megaphone.fm/adchoices

  • Wednesday · 1 hr 24 min

    Session 6: Risk, Riskfree Rates and Equity Risk Premiums (a start)

    We started this class by tying up the last loose ends with risk and return models, talking about how assuming that there are no transactions costs and private information can lead us all to hold the market portfolio, and how risk can be then measured as risk added to that portfolio. We did damn the CAPM with faint praise, arguing that it does not do very well at explaining differences in returns across companies, but that it does at least as well as the alternatives. We then started on the mechanics of the model, taking about risk free rates: how to estimate the risk free rate in a currency where there is no default free entity issuing bonds in that currency and why risk free rates vary across currencies. The key lesson is that much as we would like to believe that riskfree rates are set by banks, they come from fundamentals - growth and inflation. I have a post on risk free rates that you might find of use: http://aswathdamodaran.blogspot.com/2015/04/dealing-with-low-interest-rates.html In fact, risk free rates turned negative in a few currencies, upending what we know about risk free rates in. Here is my post on negative risk free rates. http://aswathdamodaran.blogspot.com/2016/03/negative-interest-rates-unreal.html In the final few minutes of the session, we turned to equity risk premiums and how they are related to risk aversion. Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/cfspr23/session6slides.pdf Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session6atest.pdf Post class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session6asoln.pdf Learn more about your ad choices. Visit megaphone.fm/adchoices

  • Wednesday · 1 hr 33 min

    Session 9: Bottom Up Betas

    This session is a grind with numbers building on top of numbers. In specific, we looked at how to estimate the beta for not only a company but its individual businesses by building up to a beta, rather than trusting a single regression. With Disney, we estimated a beta for each of the five businesses it was in, a collective beta for Disney's operating businesses and a beta for Disney as a company (including its cash). If you got lost at some stage in the class, here are some of the ways you can get unlost: 1. Review the slides that we covered today. 2. Try the post-class test and solution. I think it will really help bring together some of the mechanical issues involved in estimating betas. 3. Read this short Q&A on bottom up betas which highlights the estimation process and some of its pitfalls: http://www.stern.nyu.edu/~adamodar/New_Home_Page/TenQs/TenQsBottomupBetas.htm Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr17/session9.pdf Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session9test.pdf Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session9soln.pdf Learn more about your ad choices. Visit megaphone.fm/adchoices

  • Wednesday · 1 hr 56 min

    Session 6: Betas and Beyond

    In this session, after a brief mop-up on why it is dangerous to deviate too much from the implied ERP, we talked about betas. In particular, we noted that estimating a beta by running a regression against a market index can yield junk, and we talked about alternatives. Some of these alternatives are built around estimating risk using something other than prices, and some are built around looking at total risk. We did end the session with ttalk about bottom up betas, focusing on defining comparable firms and expanding the sample. I did make a big deal about bottom up betas, but may have still not convinced you or left you hazy about some of the details. If so, I thought it might be simpler to just send you a document that I put together on the top ten questions that you may have or get asked about bottom up betas. I think it covers pretty much all of the mechanics of the estimation process, but I am sure that I have missed a few things. http://www.stern.nyu.edu/~adamodar/New_Home_Page/TenQs/TenQsBottomupBetas.htm Start of the class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/betanew.pdf Slides: https://www.stern.nyu.edu/~adamodar/podcasts/valspr23/session6slides.pdf Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session6test.pdf Post class test solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session6soln.pdf Learn more about your ad choices. Visit megaphone.fm/adchoices

  • Wednesday · 52 min

    Session 10: Top Down Growth

    The first 30 minutes of this session was a quiz. We then continued our discussion of growth by the fundamentals that drive growth. In particular, we looked at how much efficiency can add to growth and how to estimate growth in companies with negative earnings Slides: http://www.stern.nyu.edu/~adamodar/podcasts/valUGspr17/session10.pdf Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session10atest.pdf Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session10asoln.pdf Learn more about your ad choices. Visit megaphone.fm/adchoices

  • Wednesday · 1 hr 25 min

    Session 8: Cost of Capital Wrap-up and First Steps on Cash flows

    Intros class, we started debt ratios for companies and how to deal with hybrid securities.. If you are interested in getting updated default spreads (on the cheap or free), try the Federal Reserve site in St. Louis: https://fred.stlouisfed.org These are spreads on indices created by rating, updated daily. Neat, right? We started on our discussion of cash flows, by laying out the big differences between earnings and cash flows, and why getting earnings updated and cleaned up is a necessary first step. In particular, we went through the process of converting an operating expense (like leases used to be pre-2019 into a financial expense. Start of the class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/cftests.pdf Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valUGspr23/session8slides.pdf Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session8Btest.pdf Post class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session8Bsoln.pdf Learn more about your ad choices. Visit megaphone.fm/adchoices

  • Tuesday · 1 hr 33 min

    Session 8: The Determinants of Betas

    We spent most of this class talking about the determinants of betas. Before we do that, though, there is one point worth emphasizing. Betas measure only non-diversifiable or market risk and not total risk (explaining why Harmony can have a negative beta and Philip Morris a very low beta). 1. Betas are determined in large part by the nature of your business. While I am not an expert on strategy, marketing or productions, decisions that you make in those disciplines can affect your beta. Thus, your decision to go for a price leader as opposed to a cost leader (I hope I am getting my erminology right) or build up a brand name has implications for your beta. As some of you probably realized today, the discussion about whether your product or service is discretionary is tied to the elasticity of its demand (an Econ 101 concept that turns out to have value)... Products and services with elastic demand should have higher betas than products with inelastic demand. And if you do get a chance, try to make that walk down Fifth Avenue... 2. Your cost structure matters. The more fixed costs you have as a firm, the more sensitive your operating income becomes to changes in your revenues. To see why, consider two firms with very different cost structures Firm A Firm B Revenues 100 100 - Fixed costs 90 0 - Variable costs 0 90 Operating income 10 10 Consider what will happen if revenues rise 10%. The first firm will see its operating income increase to 20 (an increase of 100%) whereas the second firm will see its operating income go up to 11 (an increase of 10%)... that is why looking at percentage change in operating income/percentage change in revenues is a measure of operating leverage. 3. Financial leverage: When you borrow money, you create a fixed cost (interest expenses) that makes your equity earnings more volatile. Thus, the equity beta in a safe business can be outlandishly high if has lots of debt. The levered beta equation we went through is a staple for this class and we will revisit it again and again. So, start getting comfortable with it. I also introduced the notion of betas being weighted averages with the Disney - Cap Cities example. I worked out the beta for Disney under two scenarios: an all-equity funded acquisition of Cap Cities and their $10 billion debt/ $8.5 billion equity acquisition. As an exercise, please try to work out the levered beta for Disney on the assumption that they funded the entire acquisition with debt (all $18.5 billion). Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfspr17/session8.pdf Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session8test.pdf Post class test solution: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session8soln.pdf Learn more about your ad choices. Visit megaphone.fm/adchoices

  • Tuesday · 24 min

    Data Update 5 for 2023: Profitability, Returns and Value

    One of the lessons relearned in 2022 was that the end game of any business, no matter what its potential and how many users it has, is to make money. In this session, I draw a distinction between different profit measures from gross to operating to net profit, and how the test of making money gets more difficult as you move down the income statement.. I scale profits to revenues to estimate margins, and examine the distribution of margins, and differences across geographies and industries. I look at accounting returns, standing alone, and relative to the costs of raising capital to conclude that in 2022, about 70% of all publicly traded firms earned less than their costs of equity (capital), some for good reasons, but many for bad ones. Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/DataUpdate5for2023.pdf Post: https://aswathdamodaran.blogspot.com/2023/02/data-update-5-for-2023-earnings-test.html Learn more about your ad choices. Visit megaphone.fm/adchoices

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