In his recent four day masterclass at Coronation Capital, Aswath Damodaran discussed corporate finance and business valuation including his ten key perspectives of valuation. Here’s the list:
- Valuation is not a science or art, but a craft
- Valuing an asset is not the same as pricing an asset
- A good valuation comes with a story and numbers
- All valuations are biased. The only question is how much and in which direction
- Fixing uncertainty in the area of policy stability is key to addressing issues of valuation
- For the Discounted Cash Flow Model, the choices are between the equity valuation and firm valuation
- There are no precise valuations
- The payoff to valuation is greatest when it is least precise
- One’s understanding of a valuation model is inversely proportional to the number of inputs required for the model
- Simpler valuation models do much better than complex ones
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