Valuation 101 – Numbers and Narratives

Professor Aswath Damodaran from NYU Stern, provides a brilliant insight on how Valuation needs to be approached. He throws an interesting twist on Valuation irrespective of the fact whether you’re an expert or just starting out as a beginner.

Before looking at the company, it would be worthwhile to look at yourself first.

Are you a numbers guy or are you a story – teller?

Being any one of the two should give you the area where you need to work on. He argues that if you’re a natural story teller, getting around with developing your expertise around numbers is not as difficult as it is the other way around.

Interesting anecdote from the video

Professor Ashwath Damodaran got to know about Uber when he saw charges in his credit card statements initiated by his son. While he was going ahead with the valuation exercise for Uber, his perspective i.e. the narrative was Uber trying to disrupt the entire transportation market in USA. Later when he got to know they’re getting into logistics too, the entire narrative changed where suddenly the total addressable market was the entire transportation market and the entire trucking market in the USA.

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So are you a numbers guy or a story teller? Do let me know in the comments section.

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About the author

Saket Mehrotra

Full-time Fund Manager | Sensex Follower since '09 | Free + Premium insights at Beta to Alpha & Alpha Swing | CA, CS
Senior Associate - Equities at Tusk Investments. Ex - PMI, ITC.

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