Latest news with #AswathDamodaran
Time of India
05-05-2025
- Business
- Time of India
3 lessons valuations guru Aswath Damodaran learnt from April's wild market ride
April 2025 may have ended with major indices right where they began, but to valuations expert and NYU finance professor Aswath Damodaran , the calm finish masked a month of deep market churn, revealing three hard-earned lessons for investors: markets are more resilient than pundits give them credit for, momentum is still a powerful force, and policy can — and did — bend to Wall Street's will. As market turbulence roiled global equities in April, renowned valuations expert and NYU finance professor Aswath Damodaran shared key lessons learned from the month's extraordinary volatility. In his blog published on Saturday, May 3, 2025, Damodaran dissected the unexpected resilience of equity markets amid escalating geopolitical risks, a potential U.S. Federal Reserve shakeup, and mounting tariffs. In his latest blog post published Saturday, Damodaran dissected dissected the unexpected resilience of equity markets amid escalating geopolitical risks, a potential U.S. Federal Reserve shakeup, and mounting tariffs- in a month which he says 'felt like a crisis' in its opening days — with $9 trillion in global equity market cap wiped out — before a stunning reversal that saw equities claw back almost all of their losses. 'Market resilience, market power, and the return of momentum — those were the defining characteristics of April 2025,' Damodaran said. Market resilience Despite initial market losses of nearly 10% in the first few days, equities rebounded, and by month's end, the S&P 500, NASDAQ, and MSCI World Index were all within 1% of their start-of-month levels. "If you had given a group of macro economists or market strategists just the news stories that came out during the course of the month and asked them to guess how they would play out in market reaction, almost none of them would have guessed the actual outcome," Damodaran said, highlighting the market's capacity to absorb shocks and surprise even seasoned experts. One of the clearest shifts in sentiment, Damodaran said, was the resurgence of momentum. After lagging in the first quarter, the best-performing stocks of 2024 outpaced the worst by more than six percentage points in April. The so-called 'Mag Seven' — large-cap tech firms emblematic of growth and momentum — collectively regained $1.55 trillion lost in early April. That turnaround, Damodaran suggested, 'pushed markets back into their 2024 ways,' with growth, technology and momentum reasserting dominance. Market power The valuations expert reserved some of his sharpest observations for the political theater that rattled investor trust — and the markets' role in influencing it. The month saw U.S. sovereign CDS spreads jump 38%, a reflection of growing skepticism about American fiscal credibility, amid rumors of replacing Federal Reserve Chair Jerome Powell. But markets appeared to force policymakers' hand. Damodaran argued that the administration's quick retreat on both tariffs and Powell's potential ouster shows how 'market power' shaped outcomes. 'An administration that has been impervious to Wall Street journal editorials, warnings from economists and counter threats from other governments has been willing to bend to market selling pressure,' he wrote. Market unpredictability Perhaps most strikingly, Damodaran stressed the unpredictability of the markets and how this challenged the value of active investing during times of volatility. As markets swung between fear and greed, the role of fund managers and financial experts became a topic of intense debate. Many advocates of active investing claimed that their timely interventions would have safeguarded portfolios. However, Damodaran argued the opposite, asserting that investors who followed expert advice likely suffered more losses. "The extent of damage that April did to investor portfolios was directly proportional to how much time they spent watching CNBC and listening to (or reading) what market experts told them to do," he said. Damodaran, who refrained from making market-timing decisions, instead used the volatility as an opportunity to add stocks like BYD to his portfolio, emphasizing his contrarian approach. Beneath the surface Outside equities, Damodaran noted, the bond market appeared calm — but the U.S. yield curve's odd U-shape and the jump in default spreads suggest lingering investor unease. The U.S. dollar weakened further, and commodities, particularly oil, failed to rebound with equities — signaling expectations of slowing global growth. Meanwhile, gold and bitcoin surged 5.3% and 14.1% respectively, not as safe-haven plays, Damodaran argued, but due to declining faith in fiat institutions. In Damodaran's view, the month's lesson is that even amid chaos, the crowd often gets it more right than the experts. Whether April's final three weeks were a blip or the start of a broader shift, he said, remains to be seen. Also read | Oyo shelves IPO attempt for third time over SoftBank concerns: Report
Economic Times
05-05-2025
- Business
- Economic Times
3 lessons valuations guru Aswath Damodaran learnt from April's wild market ride
Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Popular in Markets Tired of too many ads? Remove Ads April 2025 may have ended with major indices right where they began, but to valuations expert and NYU finance professor Aswath Damodaran , the calm finish masked a month of deep market churn, revealing three hard-earned lessons for investors: markets are more resilient than pundits give them credit for, momentum is still a powerful force, and policy can — and did — bend to Wall Street's market turbulence roiled global equities in April, renowned valuations expert and NYU finance professor Aswath Damodaran shared key lessons learned from the month's extraordinary volatility. In his blog published on Saturday, May 3, 2025, Damodaran dissected the unexpected resilience of equity markets amid escalating geopolitical risks, a potential U.S. Federal Reserve shakeup, and mounting his latest blog post published Saturday, Damodaran dissected dissected the unexpected resilience of equity markets amid escalating geopolitical risks, a potential U.S. Federal Reserve shakeup, and mounting tariffs- in a month which he says 'felt like a crisis' in its opening days — with $9 trillion in global equity market cap wiped out — before a stunning reversal that saw equities claw back almost all of their losses.'Market resilience, market power, and the return of momentum — those were the defining characteristics of April 2025,' Damodaran initial market losses of nearly 10% in the first few days, equities rebounded, and by month's end, the S&P 500, NASDAQ, and MSCI World Index were all within 1% of their start-of-month levels."If you had given a group of macro economists or market strategists just the news stories that came out during the course of the month and asked them to guess how they would play out in market reaction, almost none of them would have guessed the actual outcome," Damodaran said, highlighting the market's capacity to absorb shocks and surprise even seasoned of the clearest shifts in sentiment, Damodaran said, was the resurgence of momentum. After lagging in the first quarter, the best-performing stocks of 2024 outpaced the worst by more than six percentage points in April. The so-called 'Mag Seven' — large-cap tech firms emblematic of growth and momentum — collectively regained $1.55 trillion lost in early turnaround, Damodaran suggested, 'pushed markets back into their 2024 ways,' with growth, technology and momentum reasserting valuations expert reserved some of his sharpest observations for the political theater that rattled investor trust — and the markets' role in influencing month saw U.S. sovereign CDS spreads jump 38%, a reflection of growing skepticism about American fiscal credibility, amid rumors of replacing Federal Reserve Chair Jerome Powell. But markets appeared to force policymakers' argued that the administration's quick retreat on both tariffs and Powell's potential ouster shows how 'market power' shaped outcomes. 'An administration that has been impervious to Wall Street journal editorials, warnings from economists and counter threats from other governments has been willing to bend to market selling pressure,' he most strikingly, Damodaran stressed the unpredictability of the markets and how this challenged the value of active investing during times of volatility. As markets swung between fear and greed, the role of fund managers and financial experts became a topic of intense debate. Many advocates of active investing claimed that their timely interventions would have safeguarded portfolios. However, Damodaran argued the opposite, asserting that investors who followed expert advice likely suffered more losses. "The extent of damage that April did to investor portfolios was directly proportional to how much time they spent watching CNBC and listening to (or reading) what market experts told them to do," he said. Damodaran, who refrained from making market-timing decisions, instead used the volatility as an opportunity to add stocks like BYD to his portfolio, emphasizing his contrarian equities, Damodaran noted, the bond market appeared calm — but the U.S. yield curve's odd U-shape and the jump in default spreads suggest lingering investor unease. The U.S. dollar weakened further, and commodities, particularly oil, failed to rebound with equities — signaling expectations of slowing global gold and bitcoin surged 5.3% and 14.1% respectively, not as safe-haven plays, Damodaran argued, but due to declining faith in fiat Damodaran's view, the month's lesson is that even amid chaos, the crowd often gets it more right than the experts. Whether April's final three weeks were a blip or the start of a broader shift, he said, remains to be read | Oyo shelves IPO attempt for third time over SoftBank concerns: Report(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
Yahoo
27-04-2025
- Business
- Yahoo
Analyst Says Tesla (TSLA) Valuation Still ‘Incredibly Rich' as Chinese Companies ‘Eat' Its Market Share
We recently published a list of . In this article, we are going to take a look at where Tesla, Inc. (NASDAQ:TSLA) stands against other top stocks to watch ahead of May. Aswath Damodaran from NYU Stern School of Business said in a latest interview with CNBC that while investors are 'celebrating' positive results of a few major tech companies, the problems haunting these firms will take a while to show up in their results. However, Damodaran, also known as 'Dean of Valuation,' said it won't be prudent to 'give up' entirely on Mag. 7 companies. 'They can consolidate their advantage. In a weird way, again, all these troubles might play into the hands of the Mag 7, because the more troubles there are, the more flexibility gets rewarded. And as you pointed out, these companies are incredibly flexible, incredibly adaptable. We saw that with COVID, we saw that in 2022 with inflation, and I'm convinced you're going to see it again. Doesn't mean you load up on the Mag 7, but if you've never owned them, you had a chance to buy into at least one or two of them in the last month. You might have missed that chance, but the chance was there. So I wouldn't give up that easily on the Mag 7.' Damodaran said investors experienced a lot of 'trauma' in April. He argued against reactionary investing and said that when investors respond to daily events and news cycles, they damage their portfolios. 'Maybe the best thing investors could have done is left at the start of the month, gone somewhere without internet service, and come back at the end of the month. Because everything we do is reactive, and often when you're reacting to day-to-day events, you're going to end up doing more damage to your portfolio than helping.' READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In. For this article, we picked 10 stocks Wall Street analysts are talking about as the chaotic month of April nears its close. With each stock, we have mentioned its latest hedge fund sentiment. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here). Number of Hedge Fund Investors: 99 OptionsPlay's Tony Zhang said in a recent program on Schwab Network that Tesla, Inc. (NASDAQ:TSLA) valuation is still high as the company faces market share challenges across the globe: 'There's still significant downside from where we currently sit, and this is all on the back of the fact that, you know, the valuations still look incredibly rich, you know, on Tesla, whether you look at it on a multiple of earnings or multiple of revenue. Especially in an environment where deliveries have disappointed, you know, production has fell quite a substantial amount here for Q1, and we're heading into a market environment that just is quite challenging for the EV market, especially as, you know, the Chinese competitors have continued to eat market share away from Tesla across almost all of the major markets that Tesla competes in, you know, especially Europe, Asia, and now even here in the US and Australia.' Tesla's EV sales are falling all over the world as the company faces challenges from competitors. Even if Elon Musk increases his focus to fix the company's problems, it would take a lot of effort to come out of the demand crisis. For example, in California, the largest U.S. market for electric vehicle adoption and sales, Tesla sales fell about 12% year over year in 2024, causing its market share to drop from 60.1% in 2023 to 52.5% in 2024. Was it because Californians are buying fewer EVs? No. Californians purchased more than 2 million electric cars during the year, almost double when compared to the past two years. Things aren't looking good for Tesla in Europe, either. For example, in Germany, Tesla delivered just 1,429 new cars in February, down 76% from the same month last year. In contrast, battery-electric vehicle (BEV) registrations surged 30.8% during the month. Tesla (NASDAQ:TSLA) product lineup is showing signs of stagnation, with over 95% of sales still coming from the Model 3 and Model Y. Meanwhile, competitors are rolling out more advanced models. According to Reuters, Tesla's market share in Europe is slipping as legacy automakers like BMW post stronger sales. Chinese competitor BYD is also gaining ground in Europe. Aristotle Atlantic Large Cap Growth Strategy stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q1 2025 investor letter: 'The underweight in Tesla, Inc. (NASDAQ:TSLA) contributed to performance in the first quarter of 2025. Tesla's automobile sales declined in the quarter, in part due to factory changeovers that were required for updates to the company's best-selling vehicle, the Model Y. This resulted in slower sales volume in the quarter. Competition from China's BYD is causing market share losses for Tesla in several non-U.S. markets. The CEO's position as an advisor to President Trump has damaged Tesla's brand image among a cohort of traditional electric vehicle buyers.' Overall, TSLA ranks 4th on our list of top stocks to watch ahead of May. While we acknowledge the potential of TSLA as an investment, our conviction lies in the belief that under-the-radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than TSLA but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
Yahoo
27-04-2025
- Business
- Yahoo
Analyst Calls Meta Platforms (META) Valuation ‘Epically Low'
We recently published a list of . In this article, we are going to take a look at where Meta Platforms, Inc. (NASDAQ:META) stands against other top stocks to watch ahead of May. Aswath Damodaran from NYU Stern School of Business said in a latest interview with CNBC that while investors are 'celebrating' positive results of a few major tech companies, the problems haunting these firms will take a while to show up in their results. However, Damodaran, also known as 'Dean of Valuation,' said it won't be prudent to 'give up' entirely on Mag. 7 companies. 'They can consolidate their advantage. In a weird way, again, all these troubles might play into the hands of the Mag 7, because the more troubles there are, the more flexibility gets rewarded. And as you pointed out, these companies are incredibly flexible, incredibly adaptable. We saw that with COVID, we saw that in 2022 with inflation, and I'm convinced you're going to see it again. Doesn't mean you load up on the Mag 7, but if you've never owned them, you had a chance to buy into at least one or two of them in the last month. You might have missed that chance, but the chance was there. So I wouldn't give up that easily on the Mag 7.' Damodaran said investors experienced a lot of 'trauma' in April. He argued against reactionary investing and said that when investors respond to daily events and news cycles, they damage their portfolios. 'Maybe the best thing investors could have done is left at the start of the month, gone somewhere without internet service, and come back at the end of the month. Because everything we do is reactive, and often when you're reacting to day-to-day events, you're going to end up doing more damage to your portfolio than helping.' READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In. For this article, we picked 10 stocks Wall Street analysts are talking about as the chaotic month of April nears its close. With each stock, we have mentioned its latest hedge fund sentiment. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here). Bloomua / Number of Hedge Fund Investors: 235 Jeffrey Small from Arbor Financial said in a recent program on Schwab Network that Meta Platforms, Inc. (NASDAQ:META) valuation is low. 'I think Meta just recently had its best quarter in history. I don't expect them to have a significant decrease in earnings going forward. I see the long-term picture of at least 20% earnings from their AI investments as a growth rate. That's definitely one you want to buy at a discount today. It's trading at 21 times earnings. I mean, it's epically low.' Meta Platforms, Inc. (NASDAQ:META) crushed expectations with the last quarterly results but yet again pointed to higher expenses in the future. In 2025, it sees total operating expenses in a range of $114-$119 billion, with 19-25% y/y growth. Capex is expected to rise 61-74% y/y to $60-$65 billion, compared to just $37.3 billion in FY24. Advertising rose strongly but analysts believe it should be seen in the context of higher political ad spend and holiday quarter perspective. In 2025, the company might not be able to keep reporting double-digit growth in ad pricing amid weaker consumer spending and a cautious macroeconomic backdrop. In the long term, Meta shares are expected to grow because of AI. How? Meta Platforms, Inc. (NASDAQ:META) is driving usage and ads revenue by improving its algorithms and user experience thanks to AI. Meta Platforms, Inc. (NASDAQ:META)'s advancements in Reels and WhatsApp are helping manage CapEx growth as the company strives to stay competitive in AI. Meta Platforms, Inc. (NASDAQ:META)'s substantial user base of 3.3 billion provides a data and distribution edge that could capture a significant share of the GenAI market. Nightview Capital stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q4 2024 investor letter: 'Core Opportunity: Meta Platforms, Inc.'s (NASDAQ:META) platforms—Instagram, Facebook, WhatsApp, and Messenger—reach nearly half the world's population daily, making it one of the most powerful advertising ecosystems globally. With investments in AI and augmented reality (AR), we believe Meta is also creating significant optionality for long-term growth. Overall, META ranks 1st on our list of top stocks to watch ahead of May. While we acknowledge the potential of META as an investment, our conviction lies in the belief that under-the-radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than META but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey.
Yahoo
27-04-2025
- Business
- Yahoo
Analyst Says ‘No Alternative' for Taiwan Semiconductor Manufacturing (TSM), Calls Valuation ‘Cheap'
We recently published a list of . In this article, we are going to take a look at where Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) stands against other top stocks to watch ahead of May. Aswath Damodaran from NYU Stern School of Business said in a latest interview with CNBC that while investors are 'celebrating' positive results of a few major tech companies, the problems haunting these firms will take a while to show up in their results. However, Damodaran, also known as 'Dean of Valuation,' said it won't be prudent to 'give up' entirely on Mag. 7 companies. 'They can consolidate their advantage. In a weird way, again, all these troubles might play into the hands of the Mag 7, because the more troubles there are, the more flexibility gets rewarded. And as you pointed out, these companies are incredibly flexible, incredibly adaptable. We saw that with COVID, we saw that in 2022 with inflation, and I'm convinced you're going to see it again. Doesn't mean you load up on the Mag 7, but if you've never owned them, you had a chance to buy into at least one or two of them in the last month. You might have missed that chance, but the chance was there. So I wouldn't give up that easily on the Mag 7.' Damodaran said investors experienced a lot of 'trauma' in April. He argued against reactionary investing and said that when investors respond to daily events and news cycles, they damage their portfolios. 'Maybe the best thing investors could have done is left at the start of the month, gone somewhere without internet service, and come back at the end of the month. Because everything we do is reactive, and often when you're reacting to day-to-day events, you're going to end up doing more damage to your portfolio than helping.' READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In. For this article, we picked 10 stocks Wall Street analysts are talking about as the chaotic month of April nears its close. With each stock, we have mentioned its latest hedge fund sentiment. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here). Number of Hedge Fund Investors: 158 Doug Clinton from Intelligence Alpha said in a recent program on Schwab Network that his AI models 'like' Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) and explained some reasons behind his bullish view on the stock: 'The reason I think that our models like TSM is number one, you think about it from a valuation perspective. The stock has had a tough year so far, as have many chip stocks, and if you look at the forward earnings, we're trading at about 16 times forward PE. That's below the midpoint of the 10-year range for TSM, so valuation-wise, we're in a reasonable place. But number two, structurally, you just think about TSM as a company and AI in general. Any chip builder who is making these leading-edge chips, they have to use TSM. There's really no alternative, and so I think from a monopolistic standpoint, it's a great business trading at a cheap valuation. I think it'll be rocky from here because there'll be more tariff news, but I still think you want to own it over a longer time period.' Middle Coast Investing stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q1 2025 investor letter: 'Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the company we own with the most obvious geopolitical risk, and we cut our position in half. I know that if Taiwan-China flares up the damage will extend much wider, but TSM would seem to be the first domino there. And it's not as if Taiwan is having an easy time of it with the current U.S. administration.' Overall, TSM ranks 2nd on our list of top stocks to watch ahead of May. While we acknowledge the potential of TSM as an investment, our conviction lies in the belief that under-the-radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than TSM but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey.
