Aswath Damodaran: Growth Investors Have Become Lazy

Johnny HopkinsAswath DamodaranLeave a Comment

In his latest interview with the Prague Finance Institute, Aswath Damodaran explains why growth investors have become lazy. Here’s an excerpt from the interview:

Damodaran: I would argue that growth investors are becoming lazy now.

Host: And are they becoming lazy… are they becoming lazy because of cheap money, quantitative easing, what’s your take on that?

Damodaran: They’ve become lazy because they made so much money so easily for so long. That’s how people get lazy is you get… you make money without even trying. Then you stop trying.

Host: So do you think we’re gonna see some… we’re gonna see a turnaround? We’re going to see a return to value?

Damodaran: I’m not sure you’re going to return to value in the same way as you’ve done in the 20th century but you’re going to see cycles where you’re going to see three years one approach wins out.

I don’t think either approach is decisively going to be the winner going forward because that can’t be true. Because if you… if you think of one approach is decisively winning what’s going to happen right, the prices of growth stocks are going to get bid up to the point but they’re no longer decisive winners.

That’s why it always ebbs and flows. The price adjusts to whatever the market thinks is the current status quo and once a price adjusts your capacity to make easy money goes away.

You can watch the entire interview here:

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