Channeling Greenspan from the 1990s, Jerome Powell described US equities as “fairly highly valued” which may be Fed code for stocks are in a bubble. I wrote this post to examine whether markets are overpriced, and if so, whether action is warranted. bit.ly/4gXOscz Looking at the first three quarters of 2025, there is a disconnect between the news of economic disruption and costs, and what equity indices in the US have been doing. Markets clearly are at odds with experts and economists. bit.ly/4gXOscz

Imitation may be the best form of flattery, but not if it is used in a scam. In response to an Instagram scam, where I (allegedly) invite people to invest with me, I cycled through surprise, anger and frustration, before settling on curiosity & graded it. bit.ly/4mtKKcg I start by describing why I leave material on open access (not altruism, but selfishness) and how you can find any content I have created (written, spoken) online on one of four platforms. bit.ly/4mtKKcg

In the last few years, MicroStrategy has become a Bitcoin SPAC, with investors attributing savant-like status to Michael Saylor. Its success has led some to push companies to shift their cash into bitcoin. As a general principle, this is a bad idea, but there are four carveouts. bit.ly/40TEjXG The reasons for holding cash vary depending on where a company is in the life cycle from survival for young growth firms to youth serum for mature firms to liquidation manager for declining firms. bit.ly/40TEjXG

Most investment lessons are directed at long-only investors in publicly traded stocks & bonds, with cash as a buffer. It ignores vast swathes of the investing universe, including private businesses, short strategies & non-traded assets. bit.ly/4l6DOSp These ignored investments are what comprise the alternative investing universe, and in the last two decades, they have been sold relentlessly to portfolio managers, on the promise that they will yield better risk/return trade offs. bit.ly/4l6DOSp

In my eighth data update, I look at the use of debt at businesses in 2024 to fund operations, with fictional, real and frictional reasons all causing differences in debt usage across sectors and regions. bit.ly/3D5jnnR The debt versus equity choice begins with an understanding of the criteria that separate them - contractual vs residual cash flows, tax benefits and control of management. bit.ly/3D5jnnR

In my sixth data update for 2025, I move from macro topics (interest rates, risk premiums) to micro and look at why hurdle rates matter, what goes into them and how to estimate them, using my estimates of costs of capital across global firms to illustrate. bit.ly/4hOFmy3 If you own or run a business, you need hurdle rates to decide whether and how much to invest, how best to fund yourself and how much cash you can take out of the business. That is corporate finance in a nutshell, and the cost of capital is everywhere, bit.ly/4hOFmy3

In my valuation writing/teaching, I argue that a good valuation is a bridge between story and numbers, and how stories can change overnight. DeepSeek's entry into the AI business has changed the AI story, but is it a break, a change or a shift? aswathdamodaran.blogspot.com/2025/01/deepse… The AI story, pre-DeepSeek, was built around a lucrative end market for AI products/services, and high entry costs (investments in computing power & data), leading to a profitable, big business, with a (few) winners collection huge spoils. aswathdamodaran.blogspot.com/2025/01/deepse…

It the end of the first full week in 2025, and my annual data update for 2025 is ready. You can find the details on the companies used, the variables that I measure and the estimation processes here. bit.ly/408MIW5 The sample includes all publicly traded companies, listed globally, with a market price greater than zero. There are 47810 companies in the sample, and the US dominates, at least in terms of market capitalization. bit.ly/408MIW5

At the start of every year, I invite people to sit in the classes that I teach at NYU Stern, at least virtually. As the spring 2025 semester approaches, I am having an open house for all of my classes. Drop by, if you have the time. bit.ly/3ZA956q I teach because I like the stage, making a difference in how people think and their career choices and not having a boss. Teaching may not be held in much esteem any more, but I love teaching, and there is nothing else that I would rather do. bit.ly/3ZA956q

The Sugar Daddy (or Molasses Mommy) is a bounteous benefactor who funds your needs, making you incapable of self-reliance. I use it to explain why corporate venture capital, sovereign wealth funds and green investing punch well below their weights. bit.ly/48mZFzj In the aggregate, these groupings control immense and growing funding, under perform relative to their conventional peers (VC for CVC, active funds for SWF and energy companies/investors for green companies.funds) and often face no accountability. bit.ly/48mZFzj

The DOJ has targeted Alphabet for a break-up and data sharing. While that may be a negotiating strategy to extract concessions, big tech has been in the crosshairs of regulators and politicians for being "too big". My thoughts: bit.ly/3NzRlmb To understand why antitrust laws will be a reach, in the big tech context, it is worth looking at the law's evolution, from the Sherman Act (aimed at the robber baron trusts) of 1890 to the Clayton Act of 1914, and the addendums since. bit.ly/3NzRlmb

Staying with my life cycle theme, the most difficult part to navigate for both managers and investors is the "growing old" phase. I look at Intel and Walgreens facing that choice, and Starbucks feeling the middle age blues.
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The market has turned sour on all three companies, as they have all delivered sub-par returns over the last 5 years. Hiring a new CEO seems to have brought some euphoria back at Starbucks, but is it overdone?
bit.ly/4cZeuIT

Nvidia's much-anticipated earnings report last week contained dazzling performance numbers and beat expectations, but Nvidia has dropped almost 17% since it came out. I look at the expectations game that may help explain the disconnect: bit.ly/3XyrwJ5 Deconstructing the earnings release, the company seems almost too good to be true: triple digit revenue growth (year-on-year), amazing unit economics and sustained economies of scale, but just not as good as they were last quarter. bit.ly/3XyrwJ5

On the day that Nvidia has the market's attention, and AI is the talk of the town, I look at the personal disruption (to you work and jobs) that is likely to come from AI, and what you can do to stay ahead of the game. bit.ly/3X7dXi8 Whether you want it or not, there is a bot out there with your name on it, that is conspiring to do your job for you. The threat is greater if your job is mechanical (vs intuitive), rules-based (vs principle-based) and leaves no room for judgment or bias. bit.ly/3X7dXi8

I do all my classroom teaching in the spring, but if you are interested in taking my classes, and have the time, I have free online versions of my core classes (corporate finance, valuation, investment philosophies) as well as lead in skillsets. bit.ly/3tPhYNA Clicking on the class links will take you to the webpage for each of the classes, and you can see what the classes will cover in detail. Check out a session or two, if you feel uncertain. bit.ly/3tPhYNA

Since the 2008 market crisis, when I realized that risk premiums change quickly during market crises, I have updated ERP for the S&P 500 monthly, and written annual updates on equity risk premiums and country risk. My 2024 country risk update is here. bit.ly/4fioWxx That paper is more than 100 pages long, and given your busy lives, it is unlikely that you will find the time to read it. I have a blog post that summarizes it here. bit.ly/3Sl9BTd

I like writing and I am verbose, an occupational hazard when time is your ally and you have a captive audience. Most of my books are long and stretch on forever, but my Little Book of Valuation (Wiley) is the exception. That 2011 edition is aging. I just finished an update, and the new edition is now available at booksellers (online or physical) near you. Much of the original material is intact, but the valuations have been updated with a new chapter on story telling. bit.ly/49y0kgd

As the market climbs, the implied ERP for the S&P 500 drops to 4.23%, its lowest value since 2008. As a forward-looking price of risk, the ERP drives everything in markets. I have a review that I do on ERP, and my fifteenth annual update is now available: bit.ly/49fSBU0
The paper is verbose (155 pages) and not riveting reading, but it does include everything I know about equity risk premiums and their estimation. My first update was written in 2009, during the financial crisis, and I have updated it annually since. bit.ly/49fSBU0

A data hack at 23andMe, a volcanic eruption in Iceland and a global pandemic are all catastrophes, the first to just one firm, the second to a country and the third to the world. I look at catastrophic risks, and how they play out in valuation and pricing. bit.ly/3SJi9Th As humans, we are not good at dealing with catastrophic risks, swinging between denial when it is dormant and panic when it is imminent. Living in a home on an earthquake fault, two blocks from the ocean, I am no exception. bit.ly/3SJi9Th

Seven stocks (Amazon, Apple, Alphabet, Meta, Microsoft, Nvidia, Tesla) added $5.1 trillion to their market cap in 2023, accounting for about 55% of the $9.2 trillion added during the year by all 6658 US firms. bit.ly/4bsNEcB
Going back a decade, these seven stocks have climbed from 8% of the value of all US firms to more than 24% of the value, with 2022 the only serious drawdown year. At a $12 trillion market cap, the Mag Seven are now worth more than all listed Chinese stocks. bit.ly/4bsNEcB

In my fifth data update for 2024, I look at the profitability of companies, scaled to both sales and invested capital, broken down by sector, region and corporate age. bit.ly/3Uo4mns There are multiple stakeholders in businesses, but we give shareholders primacy in businesses, not because we are playing favorites, but because they are only stakeholders whose claims are residual, not contractual. bit.ly/3Uo4mns