Team Favorite At the Money: Valuation Is an Exercise in Faith

Masters in Business

Bloomberg

Business, Investing

4.4 • 2.2K Ratings

🗓️ 19 February 2025

⏱️ 15 minutes

🔗️ Recording | iTunes | RSS

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Summary

Do you understand the difference between price and value? How much faith do you have that any stock or market will eventually return to its intrinsic value? In this episode of At the Money, Barry Ritholtz speaks with Professor Aswath Damodaran of NYU Stern School of Business. He has written numerous books on valuation and finance. Each week, “At the Money” discusses an important topic in money management. From portfolio construction to taxes and cutting down on fees, join Barry Ritholtz to learn the best ways to put your money to work.

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Transcript

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0:00.0	Bloomberg Audio Studios.
0:04.6	Podcasts, Radio News.
0:06.8	Because I gotta have faith.
0:09.6	I gotta have faith.
0:12.1	Because I got to have my faith.
0:14.5	I got to have a faith, the faith, baby.
0:18.8	Oscar Wilde once described a cynic as a man who knows the price of everything but the value of nothing.
0:27.0	Nowhere is understanding value more important than in the stock market.
0:32.1	Sure, prices get quoted every second, every tick, but value, that's a much more challenging problem.
0:39.8	Whether you're buying broad indices or purchasing specific stocks, it pays to not be a cynic
0:47.1	and understand both price and value of your investments.
0:52.4	I'm Barry Rittaltz, and on today's edition of At the Money,
0:56.2	we're going to explain how to become more savvy about understanding equity values.
1:02.3	The value you pay for your investment has an outsized impact on your long-term returns.
1:08.9	To help us unpack all of this and what it means for your portfolio, let's bring in
1:13.6	Professor Aswath Damadurin of NYU's School of Business.
1:17.8	He is often referred to as the Dean of Valuation for his extensive work in the area.
1:24.0	He's written numerous books on the subject, including Damadourin on valuation, narrative and numbers, and the textbook investment valuation tools and techniques for determining the value of any asset.
1:39.5	So, Professor, let's just start with the basic question.
1:42.8	Why are valuation so important when it comes to
1:46.1	equities? I'm going to give you a cynical answer. They're not important if you're a trader.
1:50.5	Traders live on pricing. I mean, the essence of pricing is you buy at a low price,
	...

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