Practical analysis for investment professionals
21 May 2013

Aswath Damodaran: Valuation in the Face of Uncertainty

New York University professor Aswath Damodaran has been teaching corporate finance and valuation for decades. His message is simple: When valuing a publicly traded stock, the ubiquitous discounted cash flow model is a trustworthy framework. However, he admonishes financial analysts to challenge conventional wisdom and biases (i.e., no shortcuts) that create internal inconsistencies and questionable results.

At the 2013 CFA Institute Annual Conference in Singapore, the legendary Stern School of Business professor delivered his message in a talk titled “Valuation in the Face of Uncertainty.” Damodaran confessed that he’s been doing this talk for so long that he has to find new ways to repackage his message. In fact, he delivered a similar talk in late 2012 at the CFA Institute Equity Research and Valuation Conference that my colleague Dave Larrabee, CFA, nicely summarized on our Enterprising Investor blog.

The core of Damodaran’s argument is for analysts to apply a common-sense, mathematical approach to challenge general “rules of thumb” of valuation while still using accepted methodologies, such as the discounted cash flow model. During his conference double session, Damodaran walked the audience through the valuation of four companies at different points in time to illustrate several of his techniques.

Read more on the 66th CFA Institute Annual Conference blog

About the Author(s)
Rob Gowen, CFA

Robert Gowen, CFA, was Head of Product Solutions at CFA Institute, where he oversaw a team of content directors that contribute daily. Prior to joining CFA Institute, he worked in the institutional investment industry for BB&T and Fidelity Investments. Gowen earned a BA in economics from Washington University in St. Louis and an MBA from the Darden School at the University of Virginia.

Leave a Reply

Your email address will not be published. Required fields are marked *

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.