The Well-Read Investor

Episode 15: Aswath Damodaran

Today Mike speaks with Professor Aswath Damodaran about his book, Narrative and Numbers: The Value of Stories in Business. Aswath is a professor of finance at the Stern School of Business at New York University and his career-spanning work on valuation, portfolio management and corporate finance cut across numerous books and popular lectures online, and his research has appeared in many prestigious academic journals including the Journal of Financial and Quantitative Analysis and the Journal of Financial Economics.

This conversation couldn’t be more timely given all the hoopla around Gamestop and the like. Stories are driving the prices of those high flying stocks—narratives about what’s happening and why are at the core of all this mess. In fact, that’s always in some sense true with investing, but this is a very stark example.

Follow us on social media for book reviews and so much more. We cut away the fluff and tell you whether a book is worth pursuing to further your investing knowledge with irreverent insights and practical analysis. Follow us on twitter @wellreadpod and Instagram at @wellreadinvestorpod for or just google the Well Read Investor to see what I’m reading, reviewing, and talking about week in and out.

Mike Hanson (00:08):

Hello everyone and welcome to another edition of the Well-Read Investor, the podcast that profits your mind and your money.

Today our guest is Professor Aswath Damodaran in to talk about his book, Narrative and Numbers: The Value of Stories in Business. Aswath is a professor of finance at the Stern School of Business at New York University and his career-spanning work on valuation, portfolio management and corporate finance cut across numerous books and popular lectures online, and his research has appeared in many prestigious academic journals including the Journal of Financial and Quantitative Analysis and the Journal of Financial Economics, to name a few.

This conversation couldn’t be more timely given all the hoopla around Gamestop and the like. Stories are driving the prices of those high flying stocks—narratives about what’s happening and why are at the core of all this mess. In fact, that’s always in some sense true with investing, but this is a very stark example.

To me, stories are a fundamental way of knowing and understanding. They’re natural to us in ways numbers are not and can reveal certain types of information numbers will not. Yet, the impulse of many is to treat stories as inferior to data. Words are imprecise compared to numbers, and yes, they can lend themselves to fiction—that fact is both the strength and weakness of stories. Language represents an open system in which sense and nonsense can be contemplated, and through all that novelty, different insights and information can be obtained beyond raw data.

Stories are a way of thinking through the incompleteness of our world, which means they can be spun in both directions: toward the past as we interpret why things happened, and toward the future as we speculate about how things will be. Like any tool, disciplined investors should use narrative, and know how to be skeptical of it too. Anyway, economists have become very interested in narrative recently. Nobel Prize winner Richard Shiller’s recent book, Narrative Economics, is just one of many.

Lastly, if you’re enjoying our show, follow us on social media for book reviews and so much more. We cut away the fluff and tell you whether a book is worth pursuing to further your investing knowledge with irreverent insights and practical analysis. Follow us on twitter @wellreadpod and Instagram at @wellreadinvestorpod for or just google the Well Read Investor to see what I’m reading, reviewing, and talking about week in and out.

Now, here’s our conversation with Professor Aswath Damodaran. Enjoy!

-Interview-

Mike Hanson (02:47):

Aswath, thank you so much again for being on this program. It's a great honor to have you with us.

Aswath Damodaran (02:52):

Thank you for having me on.

Mike Hanson (02:54):

So you've written so many books, textbooks other types of books, today we're going to talk about Narrative and Numbers. Why is it that investors should be interested in narrative and in particular, what's interesting to you about narrative that got you onto this subject?

Aswath Damodaran (03:07):

Let me lay the foundations for how I got to that book. I've been teaching and talking and doing valuations for almost 40 years. And over the 40 years I've seen how the landscape has changed, in terms of access to data, in terms of tools that we have. So the reality check is we have much more access to data than we ever did. We have far more powerful tools than we ever did. But I was facing something that didn't make sense, which is valuations that I was looking at actually made less sense than the valuations I saw 30 or 35 years ago. So I start asking the question, what's going on? How come we have so much more data and so many more powerful tools, how is it that our valuations are not better? And as I dug, the reason that I came up with and maybe I'm wrong is that we turned over valuations to Excel Spreadsheets investing has become all about numbers. We've lost connection with the fact that without a story, you really can't value companies. You really have a bunch of numbers. So the objective in writing that book was to fill in that gap, force people to think about the stories that connect the numbers together, because that's the only way you end up with valuations in investing that actually makes sense.

Mike Hanson (04:21):

So, in a moment like this, after we've been through now nearly a year's worth of COVID plenty of political turmoil. Do you see the market as more narrative driven, more numbers driven? How do you view a continuum like that?

Aswath Damodaran (04:35):

See whatever your base, your numbers become shaky. In 2020, what happened was because of COVID the numbers didn't make much sense for companies. You look at revenues for Marriott, you're really learning nothing about the company. So what it makes people do then is that the numbers don't make sense, let me just tell a story. And what you have then is the other extreme, which is rather than relying on numbers, you're relying entirely on the story. So when you look at the Teslas, the Bitcoins, the Airbnb is the story is pushing the price up, but there seems to be no thought about how these stories play are the numbers. So this kind of illustrates the fact that you need books to be an investor. You need both stories and numbers. And right now it's all storytelling, at least in subsets of the market where people are really fascinated by stories and pushing up stock prices based purely upon stories.

Mike Hanson (05:26):

Once upon a time I started my career as an investment banker and I can certainly attest to the fact that stories are told in addition to whatever numbers you come up with, so I've always been taken with that idea. But I've listened to you many times talk about the life cycle of a company in addition to its narrative and how that folds in. Would you say a few words about that?

Aswath Damodaran (05:43):

When I tell a story about a company, one of the questions I've got to stop and ask is, is this story a fairy tale? Is it possible? Is it plausible, has somebody's done something like this before? Is it probable? And when I asked those questions about a company, I'm trying to see if that story fits the company. So I'll give you an example. If you told me a story about GM or Ford becoming a high flying electric car company, I have a problem with that. The problem is that history works against them. In terms of the life cycle. The stories be pretty much told about these companies doesn't mean that they can't reincarnate themselves, but it's much more difficult to do. So one of the advantages of putting your company in a lifecycle is when that company tells a story that doesn't make sense, doesn't fit where it is in the life cycle. It's essentially the equivalent of a 65 year old trying to play a teenager in a movie. It just doesn't work. It just doesn't connect. So, by putting companies in life cycles, you can please start to lay the foundations for, can I tell a story for this company that actually makes sense given where it is in the life cycle?

Mike Hanson (06:49):

So in the book you talk about the allure of storytelling which is an interesting turn of phrase and the emotional resonance, of course, the stories and the way humans understand each other, I think that many can understand. But would you argue in your mind that stories are just as integral as valuations or numbers that even putting aside the emotional resonance, that this is an important feature?

Aswath Damodaran (07:11):

Absolutely.  And the reason is stories connect your numbers. So I'll give you an example. When you value a company, you want higher growth. But when you use a higher growth rate, you're changing your story for the company. And you've got to be consistent with that higher growth. I'm going to ask you, where is that growth going to come from? Is it coming from cutting prices? What are you investing, in a sense telling the story makes you connect the dots rather than think of these numbers as individual inputs, where you can make up whatever you want. So stories actually keep your numbers in check. They make you think about consistency. And without those stories, the numbers can go wherever you want them to go. And stories can go wherever you want them to go.

Mike Hanson (07:54):

Now, I think I've heard you once upon a time say that, given the life cycle of a company, you need different types of leaders and CEOs, and particularly in the early parts,  you need someone who can really tell that story and a different type of story later on. Would you elaborate on that?

Aswath Damodaran (08:07):

Early in the company's life cycle, there are really no numbers, right? You're pretty young company. You can't point to history. You can't point your profits because there's nothing there. So what am I relying on? I'm relying entirely on the story. So if you're a young company you're CEO has to be a good storyteller, visionary telling a story. I mean, I like to look at companies like Tesla. Let's face it without an Elon Musk at its helm, Tesla could never be where it is today. The story drives, why investors like your company, but as companies mature, they start to have substance. The numbers play a much bigger role in what investors think about the company. So as you get to be an older and older company, your CEO has to be more of somebody who can make the train run on time.

Aswath Damodaran (08:49):

Think about Apple, Apple in its early days needed a visionary, especially when it was coming back from the dead, it needed Steve jobs in 2001, Tim Cook doesn't have a visionary bone in his body, but given where Apple is today, he might be exactly the kind of CEO Apple needs as a company. It's a $2 trillion company with lots of established products. It needs somebody who can keep delivering. So as companies age, you can get operators, people who are in fact, much more interested in supply chains than visions driving the company because of where it is in the life cycle. That's why when somebody asks, what's a perfect CEO, look like my answer is it depends on the company because the perfect CEO for a young company will not be the perfect CEO for a mature or declining company.

Mike Hanson (09:35):

You’re widely known as sort of the Dean of valuation. You teach corporate finance. You've done that for a very long time. How did you  approach narrative as a topic of study?

Aswath Damodaran (09:44):

Well, I did it because I faced an existential crisis early on in my life, teaching valuation. I discovered I had no faith in my own valuations. That sounds like an odd word to use, but you value companies because you want to act on that valuation. And I discovered I couldn't pull the trigger and I found something to be under-valued, I was unwilling to buy. So I start thinking about what it was I was missing and I realized very quickly that all I had were numbers, driving  the valuation and I could move the numbers to get whatever value I wanted. So I had no faith. So I said, what do I need to do? And what I had did, what I had to learn to do was tell stories to connect my numbers. It took time. I mean, nothing comes easily. That's why I tell people if you're a natural number cruncher, you got to work on your storytelling. If you're a natural storyteller, you've got to work on your number-crunching work on your weak side because it's not going to come naturally. It's a learned process.

Mike Hanson (10:37):

Yeah. Well, tell me about that with your students, because particularly in the professional world, you see that same dichotomy so frequently you have good communicators and often those same people will understand narrative almost in an implicit sense. And then you have number crunching folks, they both struggle to communicate with each other and frankly, most financial communication, just really, isn't very good from some of the smartest folks because they don't deliver stories either. How do you tell some of your students about that?

Aswath Damodaran (11:02):

One of the things that I tell them to do is take it slowly. Don't expect your first valuation that everything's going to click the first time you do it. It's going to be like pulling teeth. It's going to be difficult, but keep working at it because the more you work on your weak side, the more comfortable you will get. The second thing I tell them to do is hang out with people that don't think like you, because if you're an engineer, you tend to hang out with other engineers. If you're a banker, you tend to hang out with other bankers. If you're a founder, you tend to hang out with other founders. I said, be uncomfortable, hang out with people that don't think like you be willing to be challenged.

Aswath Damodaran (11:33):

Don't get defensive and learn from people that don't think like you. That, I think is the pathway to kind of building that other side of you, which is, you know, the side that you don't work on, whether it's a number side of the story side. But I think part of it is we live in a world of specialists. When I first started in investing, there were people on wall street who are people who could talk about the arts, the music, were basically went on either side of the numbers and story gap. Today, when you go on wall street, you see bankers, it was essentially number crunches. We go to where you go to venture capital meetings, it's all storytelling. So I think the specialization we've created has also had a bad side effect, which is it's meant that are more one dimensional people. People who focus on one half of the equation and not the other half.

Mike Hanson (12:18):

Yeah. There's certainly no doubt to it. Would you say people who do narrative well are those people more generalists in nature? Do they have a wider view? Is that part of what that builds?

Aswath Damodaran (12:28):

The people who tell narratives well are people I think who are willing to think about how a business actually unfolds, right? The business is not about revenue, growth and margins, but an idea, what is it that you're trying to build here? The people tell narratives kind of latch onto that and do it well. But without numbers, the danger they run is they don't know what to stop. They cross that line from plausible stories to fairy tales. Now I see founders and venture capitalists with great storytellers. Then it's like watching Shark Tank, like one of my requirements in my evaluation classes, I tell my students, they need to watch our tech at least once a week and play an active role, which is when somebody pitches a story. I want them to think about, is this story possible? Is it plausible? Is it probable the three-p deck? And what it forces them to think about are the numbers that you need to bring in to make a story plausible and probable. So I think by itself, storytelling is good, but without the discipline of numbers, it becomes fantasy land.

Mike Hanson (13:32):

Shark tank is watched every week and my household and yet my analysts kind of snicker at that, but I totally agree with you. I've learned so much about how to pitch something from that show. It's remarkable. So let's switch gears and go towards your other high competency, which is valuation and corporate finance and so forth. And I've actually heard you say once that, you sort of prefer corporate finance because there's so many levers to pull with the valuation and so on. What I'm wondering is in your experience, when do you see things really careening off into fantasy fairy tale land? And is it the numbers that ultimately ground the entire, let's say narrative or story.

Aswath Damodaran (14:07):

Let's start by giving you what I think corporate finances and valuation is. So you can see why I think open finance matters so much more than valuation. Corporate finance is about running businesses. It's about what you need to do to run a business. And in my view, you can't value a company if  you don't know how to run a business, what working capital is, how you take projects, how you decide how much debt to take, what happens when you pay dividends or buyback stock, corporate finance makes you understand the mechanics of that. And once you do that, valuation becomes much simpler. So it's a sequencing issue. Without corporate finance valuation becomes kind of arid, abstract.

Aswath Damodaran (14:44):

So corporate finance makes you think about running businesses and by forcing you to do that, it makes you much better at valuing those same businesses. So when a company borrows money to affecting the way to invest and it affects how much it pays in dividends or uses to buy back stock and by understanding those connections, you're getting better at running those companies.

Mike Hanson (15:03):

Should every investor know how to run a business then do you think?

Aswath Damodaran (15:07):

At least in a very broad sense. You can learn by walking into a corner store with the owners behind the country, talking to the owner, running a business is pretty much the same, if you're looking at a small corner grocery store or a very large company. One might face more constraints than the other, but ultimately the challenge in running a business is deciding where to invest your money, how to fund those investments and how much you can take out of the business without affecting the future of the business. That's what corporate finance is. So I think everybody would benefit from understanding the basics of running a business before they sit down to start to value companies.

Mike Hanson (15:44):

Let’s talk about the dark side then of the numbers and the valuations and sort of the hard calculations that you touch upon this in the book that there's a, there's an attitude, perhaps a power or control or the feeling of control that when you have numbers, you feel like you really know something. And tell me about the dark side of all that.

Aswath Damodaran (16:01):

Well, the dark side is you create this illusion of precision, which is you because you have hundreds of line items in your valuation. You're putting three decimals in everyone, you create the illusion that you actually know what those numbers are. One of the things I encourage people to do is be open about their uncertainties. Don't hide them from me. Put it down on paper, let it play out so you can see how your uncertainties play out in different valuations. Now, one of the things I add onto my valuations is what's called a Monte Carlo simulation where instead of making point estimates, single number judgements on what the growth is or what the margins are, I allow them to be different. I say, look, I think the revenue growth is going to be 8%. And by the way, I could be wrong.

Aswath Damodaran (16:45):

It could be as low as two or as high as 14. And I do that with my assumptions and let it play out my evaluations. What it tells me then is how much range, how much distribution there can be on my own estimated value. It's actually a great weapon against hubris because when you think you know something precisely, you tend to be overconfident and when you tend to be over-confident, you tend to make bad investment decisions by facing up to uncertainty, you face up to the reality that you live in an uncertain world, and you have to reflect that in your investment decisions.

Mike Hanson (17:19):

Having, having said all that, I think that the illusion of control, the illusion of precision, which one of those do you see as dominant today, narrative or the illusion of precision or in some level, both?

Aswath Damodaran (17:30):

It depends on where you are, right? If you are in New York, in a banker's room, it's the illusion of precision that numbers, if you are on the other coast and you're talking to a founder and venture capitalists, it's illusion that stories could carry it to whatever number you want. And that's why I think the reality lies somewhere in the middle. Maybe we need to have something in the Midwest where the two sides can come together, but it's almost like you have very different perspectives depending on where you are, at any point in time. One  of the advantages I have because I don't do consulting, I don't work with just one group of people is I get to talk to very different audiences. So one day I could be talking to CFAs in the Midwest the next day to bankers in New York, the third day founders in Silicon Valley and the fourth day to CFOs of mature companies. And I can then get very different perspectives on exactly the same topics. And the thing I wish when I talked to those groups is they could talk to each other much better. It's almost like they talk different languages. A banker talks to a VC, neither side understands what the other side is even saying. We need more communication. And that's part of the reason I wrote that book is I want number crunchers to be able to talk to storytellers because it's that conversation that makes us better at valuation. It's learning from each other.

Mike Hanson (18:51):

Now, a little more philosophical, I suppose, but do you think there's such a thing as the right valuation? I mean, you've spoken a lot about different perspectives. People coming to the table with different points of view. I've always personally felt that one of the things that makes a market strong is these very different points of view, often coming up with different valuations. How have you seen that over time? Is it about getting the right valuation to you?

Aswath Damodaran (19:12):

No, in fact, I always describe that whenever I value a company, I say it's my valuation of the company, not the valuation of the company, because it reflects my story, my views from the company, my biases let's be quite open. We bring in our preconceptions, our priors into that valuation. That's why, when you see somebody who absolutely adores Elon Musk and loves Tesla, sit down to value the company, it becomes almost pointless because you know, the end game has already been set. So I always describe my evaluations as my valuation. Then I tell people, look, I will make my decisions based on my valuation, but I don't want you making your decisions based on my valuation. You need to make my valuation into your valuation.

Aswath Damodaran (19:55):

That's why whenever I build valuations, I build them in such a way that people who disagree with me and I expect people to disagree with me, can take my valuation, change the inputs fairly simply and make this valuation to something they can use in their decision-making. Now, one way I like to describe what I do, is I'd rather be transparently wrong than opaquely, right. Which means that when I make a mistake, I want everybody to see where I made the mistake. When I watch market experts and gurus, they're so busy being opaquely right. Which is they say things in such a way that no matter what happens, they can tell. I told you so and who benefits? I don't see the point of that. I'd much rather be out there and say, this is what I think about Airbnb. I could be hopelessly wrong. This is my story. This is my valuation. Now disagree with me and make it yours, because that is the healthier way of thinking about investing in valuation.

Mike Hanson (20:47):

No, as someone who's been on that side of the table, I cannot tell you how right you are and that impulse happens quite frequently. I want to go back to narrative before we move on, though, and I have to ask you, because we've spoken about it frequently on this program and it ended up in your book, which is part of your analysis of narrative included the heroic journey of Joseph Campbell, one of my favorite scholars ever.  How did you come to him? Why him for this?

Aswath Damodaran (21:08):

See, when I started thinking about storytelling, one of the things I looked at is, how do people come up with good stories? Where are these stories coming from? So I started researching, I discovered there are only seven stories in the history of man that keeps getting told over and over again in different forms. And I was fascinated by that idea, this notion that at the core of every story is a common story. And in business I was looking for commonalities because if you don't do that, every business seems like you're starting from scratch and that's a lot of work. So what I was looking for, is some common framework that I could go back to. So when you look at the history of storytelling, it doesn't start at business. It's been around for as long as time.

Aswath Damodaran (21:49):

The difference between the stories and mythology and in novels, and the stories in business is in business, the stories are bounded by reality, I can’t make up three-headed dogs or create fantasy lands or make the dead come back to life. So I've got to reflect that in my business stories because that check keeps me from going off into what I call the fantasy land. So I started by looking at the history of storytelling and I learned a great deal. In fact, one of my favorite resources on storytelling is the Pixar slide deck on storytelling. If you get a chance, it's actually 30 suggestions that Pixar came up with on storytelling. Let's face it. Pixar is an amazing storyteller. I still watch Toy Story with my grandson and I'm fascinated by how amazing that story is. We can learn a great deal from storytellers and other disciplines, when we tell business stories, as long as we recognize the constraints that we operate under.

Mike Hanson (22:48):

That's just totally fascinating. And I know that Pixar owned by Disney, founded with Steve Jobs had Joseph Campbell roots. And so I'm not surprised to hear any of that, but that is so cool to hear you say that. I want to switch now to a little bit about your career in life and just hear a little bit more about you. You've seen a lot of things change and I'm very interested by that. What to you, especially when you talk about not just the curriculum, but how you think about valuation and all of that, how have things changed? How do people think differently today than they did when you started?

Aswath Damodaran (23:17):

The first thing is globalization is here to stay. You could have political forces, economic forces trying to work against it. But the reality is we're all connected at the hip. If nothing else, COVID, what we saw last year should have brought that home, is nobody lives on an Island anymore. Unless of course you live in New Zealand I guess, but everybody's connected to everybody else. So the first thing is when I started, people could afford to be localized. You are a US analyst. You said, who cares about the rest? And this is especially true in the U S because you could afford to be US-focused and ignore the rest of the world. But even in other parts of the world, people localized, Indian analysts thought about India. U S analyst thought about the US ,Brazilian analysts thought about Brazil.

Aswath Damodaran (23:58):

Those days are that everybody has to be a case capable and comfortable in dealing with different currencies, different countries, because they're all part of your game. Even if you're located in New York only, or Tokyo or London or wherever you decide to be in the world. The second, we live in what I call the Google search world, which is when you don't know the answer to the question, you don't try to think through, to an answer. You go on Google and you search for an answer, in my view, that's extremely unhealthy, much of what I've learned in valuation. I've learned because I come up to a question where I did not know the answer, but rather than look up the answer, I've had to think through to how I would answer that question. I would encourage people to stop being so quick. I admit it. It's very, very tempting to go and Google and search for the answer. What tax rate should I use? How should I do this? But before you do it, give yourself a pause. Maybe 15 or 30 minutes, doesn't have to be a long time. Say, how would I answer that question? Cause that I think is the way we get those connections that allow us to think through how to answer future questions.

Mike Hanson (25:05):

What things are interesting to you now, what's your next set of work? What books are you working on?

Aswath Damodaran (25:10):

The first thing I'm going to actually do, I wrote a series of 14 posts about COVID as it was happening in real time. And one of the reasons I wrote it is, if you wait until after a crisis is over and you write about, you always have the benefit of hindsight. You might not think you're bringing into play, but you always are. So I want to record in real time how I was feeling at that point in time in the crisis. So whenever people say, well, we know everything worked out fine. Why were people so worried in March? I go back and read my post on March 23rd, when the world was falling apart. And I say, you know what? There's a reason we were scared. And what I plan to do is take those 14 posts actually converted them to a book, not about COVID because that's going to be backward looking, but about what I learned about myself, about investing, about valuation in the context of COVID.

Aswath Damodaran (26:00):

So that's going to be my first project for this year. I also have 12 books that I have to revisit over and over for new editions. So I want to revisit one of my smaller books, Little Book of Valuation, which is a book which people would do what to pick up valuation 150 pages can read, and I want to rewrite it. I tried to write in simple language, but I think I can rewrite even simpler language where people who don't understand EBITDA or basic accounting at least can get a sense of what drives the value of a company. It doesn't mean they should be going out and doing crazy things like putting all their money in one stock they're valued, but they need to be able to speak the language valuation so that they don't get intimidated by people who do, because I know that people use numbers and financial language to intimidate those people that don't feel comfortable with either numbers or financial language. And I want to eliminate the complexity.

Mike Hanson (26:52):

Yeah, I'm a very big fan of that little book series of which you have written one and then it's quite an esteemed company who's written many of those as well. I think it's from Wiley. What do you tell your students today different than when you started?

Aswath Damodaran (27:04):

I tell them to be more willing to make mistakes. And part of the reason is, we live in a world of disruption and uncertainty and globalization. When I started, there were subsets of the market where you could be mechanical, the world of the old time value investor, where you could say, look, I'm going to look at companies where, which I understand that I've established financials and I'm not going to stray from that place. That place has become really small. There's a reason Warren buffet has not done very well in the last 20 years. The kinds of companies that he used to invest in have become such a small part of the market. That by staying in that space, you're giving up a big part of the market. I tell them to be willing, to deal with uncertainty and to go out and at least acquire the tools to deal with uncertainty.

Aswath Damodaran (27:50):

The leading tool for that is statistics. I know I'm horrified by how we teach statistics in college. We teach statistics in a way that people who take the class say I hope I never see that in the rest of my life. I mean, we live in a world where we're drowning in data. In fact, I don't think we can ever complain that we don't have enough data anymore. We have too much data coming at us from different directions. Statistics is tailor made for that. So my suggestion to my students is go back and buy back that statistics textbook, you are so busy to sell back to the bookstore and start using it more in your day to day analysis, because I think it's a tool that will stand us in good stead in the world we live in.

Mike Hanson (28:32):

I couldn't agree more. And one of the things I find about having a proper education in statistics is that you actually recognize statistics limitations because people tend to see numbers and they throw out some statistical value. Particularly if you're looking at polling these days and people think of it as some kind of truth.

Aswath Damodaran (28:48):

One thing also to recognize is how you can use statistics in a biased way. I think one of the big advantages of learning statistics is, you can tell when people are pulling the wool over your eyes, you know enough statistics, you can ask them the right follow-up questions. And that's a critical part of surviving with the kind of advice we get every day from so-called experts.

Mike Hanson (29:10):

Yeah. And I suppose that the proper education, there are guards against what you were talking about earlier, which is getting off into fairytale land with the narratives. Aswath, thank you so much again, for being our guest, who is our honor to have you, and it was a pleasure to speak with you.

Aswath Damodaran (29:22):

Thank you, Appreciate it.

Mike Hanson (29:35):

That was our talk with Professor Damodaran. Some people see this kind of analysis as fluffy, but understanding narratives is just as much about understanding yourself and how you interpret the world as anything about valuations. That’s one reason I personally study narrative so closely. The stories we tell ourselves create our perceived reality and we act upon them every day. I found, in particular, Aswath’s views about how narratives differ when companies are in different parts of their life cycle quite illuminating tied to the ways we discuss high-flying growth stocks here and now.

Oh boy! Come back in two weeks on February 17th as we have a very special episode to share with you. Randall Wallace, author of the screenplay for the film Braveheart (and so many other amazing films you will recognize) will be here to tell us about his one of a kind career, the process of writing and directing Oscar-worthy films, and having the courage to live the life that’s meant for you. Investor or not, I absolutely cannot wait to share this wide ranging and inspirational interview with you.

Until then, may all your reading profit your mind and your money. Take care.

Disclosure (30:49):

Investing in securities involves the risk of loss, past performance is no guarantee of future returns. The content of this podcast represents the opinions and viewpoints of Fisher Investments, and should not be regarded and personal investment advice. No assurances are made we will continue to hold these views, which may change at any time, based on new information, analysis or reconsideration. Copyright Fisher Investments, 2021.

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Investing in securities involves a risk of loss. Past performance is never a guarantee of future returns. Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations.

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