NVIDIA, The AI Hype, and a Changing Investing Landscape | Global Macro 67
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- Опубліковано 11 вер 2024
- Aswath Damodaran, Professor of Finance at NYU Stern and a leading expert on valuation and corporate finance joins Alan Dunne in this episode for a fascinating and thought-provoking discussion on current markets and investing in general. They explore why Aswath believes we have witnessed the death of old-school value investing and how structural shifts in the economy have fundamentally altered the investing landscape. The discussion delves into the valuation of Nvidia and the Mag 7, questioning whether the hype around AI is justified. Aswath outlines his approach for long-term valuation, explains how he estimates the equity risk premium, and discusses what the current equity risk premium suggests for long-term equity market returns. They also cover the importance of bond yields for valuation, the shortcomings of P/E as a valuation measure, and whether assets without cash flows, like gold and crypto, can be valued. The episode wraps up with Aswath’s advice for becoming a better investor and preparing for an AI-driven future.
#toptraders #investing #trendfollowing
Episode TimeStamps:
02:18 - Introduction to Aswath Damodaran
03:30 - Nvidia - bullish or bearish?
04:47 - How AI will impact the economy
10:48 - How to make better valuations in AI and technology stocks
14:36 - How to distinguish AI stocks from each other
17:58 - A sticky market
22:40 - How should you act to the AI boom as an investor?
31:07 - Are value investor becoming obsolete?
35:49 - What is the equity risk premium?
40:28 - How much equity risk premium is enough?
45:08 - Dealing with macro shocks and timing the markets
50:01 - Inflation and its impact on stocks
51:51 - Don't rely on the P/E ratio alone
53:08 - The link between GDP and earnings
54:31 - The importance of investing globally
57:35 - Can assets with no cash flows be valued?
58:27 - Managing the risk
01:01:56 - Advice for other investors
Full episode can be found here:
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Honestly, this situation makes me uneasy, especially with the potential depression, not just a recession. I'm not sure about my $130K investment strategy given the economic uncertainty.
I agree. Even with great opportunities, we should proceed cautiously. Seeking market analysis or advice from certified market strategists is important.
Absolutely, having a solid plan is crucial. My portfolio has doubled since early last year. My financial advisor and I are working towards a seven-figure goal, though it might take until Q3 2024.
I could really use the expertise of an advisor like that.
Her name is Bonita Jeanette Rodriguez. Just look her up, and you'll find the details to set up an appointment.
Thanks for sharing. I searched for her name and found her website. I reviewed her credentials and did my research before contacting her. Thanks again.
AI stocks will dominate 2024. Why I prefer NVIDIA is that they are better placed to maintain long term growth potential, and provide a platform for other AI companies. I know someone who has made more than 200% from NVIDIA. I'll also take any other recommendations you make.
I think the next big thing will be A.I. For enduring growth akin to META, it's vital to avoid impulsive decisions driven by short-term fluctuations. Prioritize patience and a long-term perspective consider financial advisory for informed buying and selling decisions.
Ai is a bubble it has to burst. and byproduct of optimism.
Aswin Damodharan at current price sitting with CAGR of 75% (Bought at 2.70 dollars per share , holding for 7 years, current price 120 dollars)
Absolute gold! Found this podcast with low expectation but this conversation was amazing. Mr. Damodaran has very real market wisdom. He teaches how to think rather than to get lost in the minutiae of tactical details.
I've owned NVDA for over 8 years. It's been up and down, but I believe in Jensen Huang and will stick with NVDA until Jensen says otherwise. I know that sounds crazy, but when the financial statements/Jensen, (same to me) tell me to sell, I will. I'm sure I won't sell at the top, but that's OK.
Kept $105k in CIT Bank HYSA at 5.05% but i now plan to invest in the stock market. What are your thoughts on that? What stocks should I look out for as a newbie to safely grow my money?
I'm surprised this channel doesn't have 100k's or a million subs... such an undervalued channel, thank you for all that you bring to us
A truly fantastic discussion. The best interview with Aswath that I've come across. Well done guys.
One of your best episodes to date
Excellent. One of the most thought provoking discussions I have heard in a long time
Tons of common sense gold nuggets in this conversation. Loved it!
He seemed pretty adversarial the whole conversation. Like even the first question the interviewer couldn't get out before he went on a bit of a tirade. Interesting points though.
This conversation is Gold! Pls create more. Thank you both!
Aswath an insightful genius...Alan a fool asking mundane irrelevant expectational questions
One of my favorites
Aswath is out for lunch, what kind of value investors are shorting companies?
Super as always....
Great insight
this is gold
“Read less, think more”
Some feedback for the interviewer, there was no need to interrupt the professor while he was giving a response.. don’t try to fit everyone into your version of reality
Guys Pin this interview on your channel. This one is a 💎
🙏😊👍
“ If all you do is mechanical stuff, a bot will do it much better than you can “
And at the right price, you should be willing to sell that stock!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
How many finance professors have billionaires?
How do you have a billionaire?
It is a valid argument. However without some finance professors at least, would the billionaires be billionaires considering most of the wealth is nowadays in market cap which is determined by metrices that are codified in part by finance professors and the regulator?
Aswath is also not asking the right questions. If a company spends $500m on AI and it saves them $1B, that is value accretive. AI is FAR more than computing and data. It requires an interplay of two that is extremely difficult to build.
He’s being as lazily “bearish” as he claims at the outset not to be. Palantir has already proven an ability to do this or it would not be exploding. This is his MO: he sounds very smart-like most bears-by constantly being skeptical where others are optimistic. It’s not very nuanced, and he’s not saying anything about where we’re going. If you listen to him you’d think the economy is pretty much what it was twenty years ago.
The question isn’t whether it will drive the economy as much as increasing productivity. Anyone who doesn’t see that is a fool.
AI will be nothing like the internet outside cherry picking parallels. This is the biggest technological revolution to hit humankind. Period. If you don’t think so you don’t understand AI. Thinking it’s a buzzword is ignorant.
In that same vein he’s not even seeing Nvidia’s push into software-which is where the money is for AI. Nvidia knows that. Palantir knows that. Building the algorithms is the market of the future. The ability to turn AI into ROI and efficiency and resources and productivity-that’s the AI market. Thinking that won’t be $3-$4T is laughable.
What's your argument? That Nvidia will become a dominant player in the AI Software market? He addresses this very point when he says that Nvidia's current valuation bakes in the expectation that it will conquer another market beyond the chip market. This is purely speculative investing and unlikely to end well.
Also, when you talk about Nvidia's customers spending you're missing that the trajectory of the spend and the saving looks very different, as the infrastructure spend is pulled-forward.
Maybe you should have an open mind and try to understand Aswath's points. Otherwise, have fun when the valuations come back to earth.
Agreed. Frankly, given he's an NVDA shareholder, his pessimism on NVDA is odd.
When NVDA hit 90 a few weeks ago, it was trading at 25x 2025 earnings, discounting Jesse's sandbag guidance. Im sorry but that is cheap. NVDA is not "priced for perfection" , it's undervalued by anyone who has properly studied it.
If you want to hear some talk about AI properly, check out Eric Schmit, Google;s ex CEO.
It's more so that the implication of future potential being pulled forward into today's valuations
I'm also not very convinced the impact of AI will have much more of a significant effect beyond the advent of the PC or the Internet
@@revl6151 What you’re saying makes little sense. The advent of the PC and internet were absolutely massive game changers. So if AI is on par with either, the market is vastly underestimating their impact.
Far too much talk about AI and not enough about super accelerated computing with chips that are 10,000x faster on everyone’s desk.
do a podcast then