Air date: Sept 9, 2021 Professor Aswath Damodaran, NYU professor at the Stern School of Business, author, and frequent commentator on CNBC, is back by popular demand for another presentation to a joint session of the of the Financial Executives International SF Bay Area chapter and the American Society of Appraisers Northern California chapter! During this session, Professor Damodaran serves as our “sensei” on value – and focuses on the impact of risk on company valuations. Investors are constantly in search of a single metric that will tell them whether the market is under or over valued, and consequently whether they should be buying or selling holdings in that market. With equities, one of the metrics that has long been in use is the Price-to-Earnings (“PE”) ratio. The PE ratio, though, has been signaling that stocks have been over valued for most of the last decade – a ten-year period when stocks delivered blockbuster returns (even despite the COVID-19 pandemic). The failures of the metric have been variously attributed to low interest rates, the lack of linkage of profitability (or unprofitability) to company valuations (in particular in the technology sector), and, according to the Professor, by some to “animal spirits.” During his presentation, Professor Damodaran discusses an alternative metric that he believes provides not only a comprehensive measure of pricing, but also operates as a barometer of ups and downs in the market. This metric, the equity risk premium, is utilized extensively in the valuation/appraisal world and the Professor will provide his insights on its use as an indicator of risk and its impact on value. In addition to discussing the Price of Risk, Professor Damodaran also covers the power of story as a driver of corporate value – and the importance of narrative to understanding different valuations. He covers a detailed case study on value drivers for a company which went public in August 2021.
Thank you to Business Valuation Discipline Chair – Josette Ferrer for your time, dedication and efforts for organizing this exceptional live webinar event for the ASA NorCal Chapter members.