Chennai: The legendary professor likes to be called just a teacher. It was appropriate then that he should be invited by TVS Capital Funds to Chennai, his hometown in his student days, to do just what he wished to do — talk to students and teach them the basic elements of business valuation, his specialty.
Hundreds of students gathered at a city hotel on Saturday morning to listen in wonder to a lecture by one of the world’s top rated business school professors. “I don’t want to be talking to CEOs and CFOs. I would much rather be talking to the people in the trenches, giving them the tools that will help them know the answers to all the questions that they will be facing in their lives,” Professor Aswath Damodaran explained.
Having predicted the top of Apple and the bottom of Facebook stock offerings accurately, Aswath Damodaran has quite a reputation to live up to. It is his philosophy explaining logically the processes that create the great phenomenon of the world that was fascinating.
A pre-lecture press conference was an ideal platform to catch up with what he thought of the social network phenomenon, the great bubble burst of 2007-2009 and the business of investing.
Aswath would like to believe he is the reality check for hedge funds and other related enterprises as he balances what is realistic on the ground and the blind optimism that is known to run in entrepreneurs when it comes to valuing their companies.
The underlying principle stressed is we should go by the value of a thing rather than its price. There is a world of difference between valuation and pricing and the modern guru who swears by this is the professor.
Elaborating on his methods that have seen his blog on stocks one of the 10 most read on the web, Aswath says it is cash flow that determines the value of a business rather than its price in the stock market. And he has been proved chillingly right in many of his predictions.
However, he has no sympathy for those who lost money in bubbles because they make money out of it and it is easy come, easy go. “Sometimes you become the biggest fool because the bigger fool than you does not come along to buy it (stock or house) from you. The music simply stopped for them,” he said.
As a bestselling author in the business books category, Aswath is somewhat self deprecating when he says the three things that sell most books are ‘salvation, sex and stocks.’ A breakfast meeting lends plenty of food for thought but it was the enthusiasm of the students who were not willing to believe at first that the ‘teacher’ was actually coming and that a video presence would at best be the interaction.
Believe their luck then that they heard advise from the master first hand. And just in case you wish to know his investment philosophy, it is patience.
