Aswath Damodaran: Stick To Your Philosophy Or Just Buy The Index

During this interview with The Millennial Investing Podcast, Aswath Damodaran discussed sticking to your philosophy of just buying the index. Here’s an excerpt from the interview:

Damodaran: So to me sometimes companies make my list because I like to own them but I don’t like the price they’re at, but I know that if I wait long enough the market will be right.

I had to wait 16 years to buy Google you know because it kept being overpriced in my… at least based on my assessment of value.

Now I could have been wrong every one of those 16 years but I have to stay true to my investment philosophy which is I value companies rightly or wrongly, and I’ve got to make decisions based on my estimate of value because if I don’t then what’s the point?

If I’m going to abandon that rule because everybody else likes Google or I’ve saw a buy recommendation from Morgan Stanley on the company, generally I don’t have a philosophy.

And if you find yourself constantly bypassing your philosophy because of something you heard on CNBC or Jim Cramer just recommended the company maybe it’s time to stop being an active investor. Put your money in index funds. Go back to living the rest of your life. You can live a fulfilling happy life without ever valuing a company.

You can watch the entire discussion here: