Latest news with #Damodaran
Economic Times
21-07-2025
- Business
- Economic Times
Aswath Damodaran gives 4 reasons why companies should think twice before parking cash in Bitcoin
As Bitcoin prices flirt with record highs and corporate interest in the crypto asset gains momentum, valuation guru and NYU finance professor Aswath Damodaran has waded back into the Bitcoin debate with a sharp rebuttal to the growing chorus urging companies to stash their cash in crypto. ADVERTISEMENT In a July 18 blog post titled "To Bitcoin or not to Bitcoin? A Corporate Cash Question!", Damodaran lays out a clear stance: 'It is a terrible idea for most companies,' he said, adding, 'my reasoning has absolutely nothing to do with what I think of bitcoin as an investment and more to do with how little I trust corporate managers to time trades right.' Damodaran, renowned for his empirical approach to corporate finance and valuation, argues that Bitcoin fails to meet the core objectives of corporate cash holdings and instead introduces avoidable risks to both balance sheets and business narratives. At the heart of Damodaran's argument is a simple truth: corporate cash is meant to act as a financial shock absorber. Companies hold cash, he said, 'to meet unforeseen needs,' and to navigate crises or downturns when capital markets dry up. 'Replacing low-volatility cash with high-volatility bitcoin would undercut this objective, analogous to replacing your shock absorbers with pogo sticks,' Damodaran warned. Given Bitcoin's history of plunging during market sell-offs, he said, 'the value of bitcoin on a company's balance sheet will dip at exactly the times where you would need it most for stability.' Damodaran argued that allowing Bitcoin to play a prominent role on the balance sheet can distract from the company's core business story. 'It creates confusion about why a company with a solid business narrative from which it can derive value would seek to make money on a side game,' he said. Even worse, he said, Bitcoin's inherent volatility can obscure a company's performance: 'The ebbs and flows of bitcoin can affect financial statements, making it more difficult to connect operating results to story lines.' ADVERTISEMENT The professor made clear his skepticism about letting CEOs and CFOs dabble in timing markets. 'When companies are given the license to move their cash into bitcoin or other non-operating investments, you are trusting managers to get the timing right,' he noted. 'That trust is misplaced, since top managers… are for the most part terrible traders, often buying at the market highs and selling at lows.'Instead of letting corporate leaders gamble on Bitcoin, Damodaran argued that shareholders would be better off receiving that cash as dividends or buybacks to deploy it how they see fit. 'Put simply, if you believe that Bitcoin is the place to put your money, why would you trust corporate managers to do it for you?' Damodaran underscored a governance concern: 'Giving managers the permission to trade crypto tokens, bitcoin or other collectibles can open the door for self-dealing and worse.' He suggested that even if shareholders don't object, regulators might need to step in. 'The SEC (and other stock market regulators around the world) may need to become more explicit in their rules on what companies can (and cannot) do with cash,' he said. ADVERTISEMENT Though firmly against most firms converting cash to crypto, Damodaran outlined four carveouts where holding Bitcoin might be justifiable, albeit with strong governance and transparency:'The Bitcoin Savant': A company led by a CEO trusted for their trading acumen, like MicroStrategy's Michael Saylor, may earn shareholder buy-in to speculate with cash. ADVERTISEMENT 'The Bitcoin Business': For companies like Coinbase or PayPal, which handle Bitcoin as part of their operations, it can make sense to hold the asset as working capital.'The Bitcoin Escape Artist': Firms in countries with failed fiat currencies, such as Argentina, might rationally prefer Bitcoin over unstable local currencies.'The Bitcoin Meme': Companies like AMC or GameStop, whose stock prices are driven more by trading momentum than business fundamentals, may choose to amplify that volatility. ADVERTISEMENT Even in these cases, Damodaran called for 'shareholder buy-in,' 'transparency about Bitcoin transactions/holdings,' and 'clear mark-to-market rules.' Damodaran concluded by cautioning Bitcoin advocates who are eager to see institutional and corporate adoption. While more demand may boost prices in the short term, the longer-term costs could prove damaging. 'Adding these investors to the mix will put [Bitcoin's] volatility on steroids,' he warned, and 'may lead at least some of them to regret this push.' His final takeaway for companies considering a crypto pivot? No matter how bullish you are on Bitcoin, think twice before making it part of your corporate cash strategy. Also read | I don't promote stocks, seek out investors: Aswath Damodaran (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
21-07-2025
- Business
- Time of India
Aswath Damodaran gives 4 reasons why companies should think twice before parking cash in Bitcoin
As Bitcoin prices flirt with record highs and corporate interest in the crypto asset gains momentum, valuation guru and NYU finance professor Aswath Damodaran has waded back into the Bitcoin debate with a sharp rebuttal to the growing chorus urging companies to stash their cash in crypto. In a July 18 blog post titled "To Bitcoin or not to Bitcoin? A Corporate Cash Question!", Damodaran lays out a clear stance: 'It is a terrible idea for most companies,' he said, adding, 'my reasoning has absolutely nothing to do with what I think of bitcoin as an investment and more to do with how little I trust corporate managers to time trades right.' Explore courses from Top Institutes in Select a Course Category Artificial Intelligence Degree Finance Leadership Public Policy others MCA Product Management PGDM Design Thinking Others Digital Marketing Data Science CXO Cybersecurity Management Project Management Data Science Technology Healthcare healthcare MBA Skills you'll gain: Duration: 7 Months S P Jain Institute of Management and Research CERT-SPJIMR Exec Cert Prog in AI for Biz India Starts on undefined Get Details Skills you'll gain: Duration: 7 Months S P Jain Institute of Management and Research CERT-SPJIMR Exec Cert Prog in AI for Biz India Starts on undefined Get Details Damodaran, renowned for his empirical approach to corporate finance and valuation, argues that Bitcoin fails to meet the core objectives of corporate cash holdings and instead introduces avoidable risks to both balance sheets and business narratives. 1. 'Bitcoin does not meet the cash motives' At the heart of Damodaran's argument is a simple truth: corporate cash is meant to act as a financial shock absorber. Companies hold cash, he said, 'to meet unforeseen needs,' and to navigate crises or downturns when capital markets dry up. 'Replacing low-volatility cash with high-volatility bitcoin would undercut this objective, analogous to replacing your shock absorbers with pogo sticks,' Damodaran warned. Given Bitcoin's history of plunging during market sell-offs, he said, 'the value of bitcoin on a company's balance sheet will dip at exactly the times where you would need it most for stability.' 2. 'Bitcoin can step on your operating business narrative' Damodaran argued that allowing Bitcoin to play a prominent role on the balance sheet can distract from the company's core business story. 'It creates confusion about why a company with a solid business narrative from which it can derive value would seek to make money on a side game,' he said. Even worse, he said, Bitcoin's inherent volatility can obscure a company's performance: 'The ebbs and flows of bitcoin can affect financial statements, making it more difficult to connect operating results to story lines.' 3. 'Managers as traders?' The professor made clear his skepticism about letting CEOs and CFOs dabble in timing markets. 'When companies are given the license to move their cash into bitcoin or other non-operating investments, you are trusting managers to get the timing right,' he noted. 'That trust is misplaced, since top managers… are for the most part terrible traders, often buying at the market highs and selling at lows.' Instead of letting corporate leaders gamble on Bitcoin, Damodaran argued that shareholders would be better off receiving that cash as dividends or buybacks to deploy it how they see fit. 'Put simply, if you believe that Bitcoin is the place to put your money, why would you trust corporate managers to do it for you?' 4. 'License for abuse' Damodaran underscored a governance concern: 'Giving managers the permission to trade crypto tokens, bitcoin or other collectibles can open the door for self-dealing and worse.' He suggested that even if shareholders don't object, regulators might need to step in. 'The SEC (and other stock market regulators around the world) may need to become more explicit in their rules on what companies can (and cannot) do with cash,' he said. The carveouts: When Bitcoin might make sense Though firmly against most firms converting cash to crypto, Damodaran outlined four carveouts where holding Bitcoin might be justifiable, albeit with strong governance and transparency: 'The Bitcoin Savant': A company led by a CEO trusted for their trading acumen, like MicroStrategy's Michael Saylor, may earn shareholder buy-in to speculate with cash. 'The Bitcoin Business': For companies like Coinbase or PayPal, which handle Bitcoin as part of their operations, it can make sense to hold the asset as working capital. 'The Bitcoin Escape Artist': Firms in countries with failed fiat currencies, such as Argentina, might rationally prefer Bitcoin over unstable local currencies. 'The Bitcoin Meme': Companies like AMC or GameStop, whose stock prices are driven more by trading momentum than business fundamentals, may choose to amplify that volatility. Even in these cases, Damodaran called for 'shareholder buy-in,' 'transparency about Bitcoin transactions/holdings,' and 'clear mark-to-market rules.' Cui Bono? Damodaran's final word Damodaran concluded by cautioning Bitcoin advocates who are eager to see institutional and corporate adoption. While more demand may boost prices in the short term, the longer-term costs could prove damaging. 'Adding these investors to the mix will put [Bitcoin's] volatility on steroids,' he warned, and 'may lead at least some of them to regret this push.' His final takeaway for companies considering a crypto pivot? No matter how bullish you are on Bitcoin, think twice before making it part of your corporate cash strategy. Also read | I don't promote stocks, seek out investors: Aswath Damodaran ETMarkets WhatsApp channel )
Economic Times
17-07-2025
- Business
- Economic Times
I don't promote stocks or seek out investors: Aswath Damodaran warns against scammers
Damodaran stresses he is a teacher, not an investment adviser, amid a rise in online scams using his identity to promote financial products. Synopsis NYU finance professor Aswath Damodaran issued a strong social media warning, distancing himself from investment promotions or affiliations. Highlighting rising impersonation cases, he reaffirmed his educator role and cautioned followers against scams misusing his name and insights. Valuations expert and NYU finance professor Aswath Damodaran on Thursday issued a strong public clarification on social media platform X, distancing himself from any investment promotion or affiliation with financial entities, amid concerns over online impersonation and misinformation. ADVERTISEMENT 'I am a teacher, first and foremost. I don't promote stocks, seek out investors or have ties with investment entities,' Damodaran posted on X. 'I also don't have an Instagram account or post on Facebook. In short, if you read anything that claims otherwise, it is a scam. If you have no idea what I am talking about, good! If you do, please report the scammers! Thank you!' The post comes at a time when Damodaran's high-profile commentary, ranging from his valuation takes on individual companies to macro views on alternative investments, has gained renewed traction among retail and institutional investors alike. His warning serves as a reminder of the blurred lines between public intellectuals and financial influencers in the age of social media. Damodaran has consistently emphasized his role as an educator, not an investment adviser. Over the years, he has pushed back against efforts to ascribe to him a promotional agenda, reiterating that his insights are intended for learning and critical thinking, not for stock tips or portfolio last month, in a June 18 blog post, Damodaran laid out a four-point framework urging skepticism toward the growing retail push into alternative assets like private equity, hedge funds, and collectibles. 'Even savvy institutional investors... are questioning whether private equity, hedge funds and venture capital have become too big and are too costly to be value-adding,' he wrote, warning that promises of high returns and diversification often fail to flagged the complexity, opacity, and high fees associated with such vehicles, arguing that these drag on returns and often mask risks that become painfully visible during market stress. ADVERTISEMENT While Damodaran has occasionally revealed his own investment actions, such as placing limit orders for companies like BYD, Mercado Libre, and Palantir in early April, he has done so within the context of his broader valuation philosophy, not as calls to action. 'The crisis is young, and the order is good until canceled,' he noted in a blog post this April, referencing his methodical approach during a market downturn. At the time, he likened reckless dip-buying to 'the art of catching a falling knife,' arguing that careful valuation—not momentum or hype—should drive investment decisions. ADVERTISEMENT Thursday's post on X reinforces that stance, as Damodaran once again draws a clear boundary between education and solicitation. His message is a caution to the public, and a signal that his work remains grounded in independence.'If you read anything that claims otherwise, it is a scam,' he warned. 'If you do, please report the scammers!' ADVERTISEMENT Also read | Aswath Damodaran explains 3 reasons why Moody's ratings downgrade of the U.S. didn't impact market(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel) Nikita Papers IPO opens on May 27, price band set at Rs 95-104 per share Nikita Papers IPO opens on May 27, price band set at Rs 95-104 per share Why gold prices could surpass $4,000: JP Morgan's bullish outlook explained Why gold prices could surpass $4,000: JP Morgan's bullish outlook explained Cyient shares fall over 9% after Q4 profit declines, core business underperforms Cyient shares fall over 9% after Q4 profit declines, core business underperforms L&T Technology Services shares slide 7% after Q4 profit dips L&T Technology Services shares slide 7% after Q4 profit dips Trump-Powell standoff puts U.S. Rate policy in crosshairs: Who will blink first? 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Time of India
17-07-2025
- Business
- Time of India
I don't promote stocks or seek out investors: Aswath Damodaran warns against scammers
Valuations expert and NYU finance professor Aswath Damodaran on Thursday issued a strong public clarification on social media platform X, distancing himself from any investment promotion or affiliation with financial entities, amid concerns over online impersonation and misinformation. 'I am a teacher, first and foremost. I don't promote stocks, seek out investors or have ties with investment entities,' Damodaran posted on X. 'I also don't have an Instagram account or post on Facebook. In short, if you read anything that claims otherwise, it is a scam. If you have no idea what I am talking about, good! If you do, please report the scammers! Thank you!' Explore courses from Top Institutes in Select a Course Category Design Thinking Cybersecurity Digital Marketing Leadership Data Science Technology PGDM Degree MBA Operations Management Data Science Healthcare Finance Product Management Public Policy Management CXO Others others healthcare Artificial Intelligence Project Management Data Analytics MCA Skills you'll gain: Duration: 22 Weeks IIM Indore CERT-IIMI DTAI Async India Starts on undefined Get Details Skills you'll gain: Duration: 25 Weeks IIM Kozhikode CERT-IIMK PCP DTIM Async India Starts on undefined Get Details I am a teacher, first and foremost. I don't promote stocks, seek out investors or have ties with investment entities. I also don't have an Instagram account or post on Facebook. In short, if you read anything that claims otherwise, it is a scam. If you have no idea what I am… — Aswath Damodaran (@AswathDamodaran) July 16, 2025 Warning amid rising profile The post comes at a time when Damodaran's high-profile commentary, ranging from his valuation takes on individual companies to macro views on alternative investments, has gained renewed traction among retail and institutional investors alike. His warning serves as a reminder of the blurred lines between public intellectuals and financial influencers in the age of social media. Damodaran has consistently emphasized his role as an educator, not an investment adviser. Over the years, he has pushed back against efforts to ascribe to him a promotional agenda, reiterating that his insights are intended for learning and critical thinking, not for stock tips or portfolio advice. Longstanding voice of caution Just last month, in a June 18 blog post, Damodaran laid out a four-point framework urging skepticism toward the growing retail push into alternative assets like private equity, hedge funds, and collectibles. 'Even savvy institutional investors... are questioning whether private equity, hedge funds and venture capital have become too big and are too costly to be value-adding,' he wrote, warning that promises of high returns and diversification often fail to deliver. Live Events He flagged the complexity, opacity, and high fees associated with such vehicles, arguing that these drag on returns and often mask risks that become painfully visible during market stress. Valuation over hype While Damodaran has occasionally revealed his own investment actions, such as placing limit orders for companies like BYD, Mercado Libre, and Palantir in early April, he has done so within the context of his broader valuation philosophy, not as calls to action. 'The crisis is young, and the order is good until canceled,' he noted in a blog post this April, referencing his methodical approach during a market downturn. At the time, he likened reckless dip-buying to 'the art of catching a falling knife,' arguing that careful valuation—not momentum or hype—should drive investment decisions. Thursday's post on X reinforces that stance, as Damodaran once again draws a clear boundary between education and solicitation. His message is a caution to the public, and a signal that his work remains grounded in independence. 'If you read anything that claims otherwise, it is a scam,' he warned. 'If you do, please report the scammers!' Also read | Aswath Damodaran explains 3 reasons why Moody's ratings downgrade of the U.S. didn't impact market
India Today
04-07-2025
- Business
- India Today
From tradition to trend: How India's classics are getting a modern edge
India has long had a deep affinity for brown spirits, particularly whisky. It's a drink steeped in culture and ritual, present at weddings, family gatherings, and celebratory toasts. But in recent years, the country's drinking habits have begun to evolve, nudging the once-whiskey-dominated scene into newer, lighter Today spoke with Vikram Damodaran, Chief Innovation Officer, at Diageo India, to understand what's driving this transformation. He points to shifts in consumer preferences, occasion-based drinking, and a growing desire for customisation and cleaner options—all contributing to a new kind of drinking consumers—particularly those between the ages of 25 and 34—are approaching alcohol differently from the generations before them. They're not necessarily drinking more, but drinking with more intention. Health awareness, global exposure, and rising disposable income are influencing the move from mass-market choices to more refined, experience-led ones. This age group is increasingly drawn to spirits that feel lighter and more versatile. 'We're seeing a clear shift in behaviour where consumers are trading volume for value,' says Damodaran. 'They want options that offer flexibility, mixability, and align with their lifestyle.'White spirits such as vodka, gin, white rum, and even tequila are finding favour amongst urban consumers looking for lower-calorie, low-sugar drinks that also lend themselves to creativity. With their neutral or botanical profiles, these spirits work well with herbs, fruits, tonics, and spices, allowing users to customise their labels are responding with X Series illustrates this well - introducing vodka, gin, citron rum and dark rum variations to complement its whisky legacy, aimed squarely at cocktail context in which people drink has changed dramatically. Rather than being reserved for large social functions, alcohol is now part of smaller, more personalised moments—whether it's a quiet night in, a virtual hangout, or an afternoon micro-occasions have given rise to a more mindful style of consumption, where mood and setting dictate the pour. Spirits that are easy to adapt—served neat, with mixers, or in a cocktail—have naturally gained popularity in this AND AESTHETICS INFLUENCING BUYING BEHAVIOURPackaging and presentation also matter more than ever. Sleek bottle designs, minimalistic labelling, and premium aesthetics are influencing what consumers pick up off the shelf. It's no longer just about what's inside the bottle—appearance plays a role in expressing identity and taste.'There's a growing demand for products that not only taste good but also reflect personal style,' says Damodaran. 'Design has become an unspoken language between the brand and the consumer.'TRADITION ISN'T BEING REPLACED—IT BEING REDEFINEDThis transition doesn't mean that brown spirits are disappearing from Indian bar shelves. Instead, there's a growing coexistence—where classic choices are being complemented by new ones, and rituals are being updated with modern many ways, the shift reflects broader social changes: a generation open to experimentation, conscious of wellness, and more focused on quality over quantity.A CULTURE IN MOTIONIndia's alcohol landscape is becoming more diverse, inclusive, and experiential. The focus is no longer just on legacy but on how that legacy adapts to contemporary lifestyles. From clean labels to curated drinking moments, the country is embracing a wider spectrum of spirits and evolution marks more than just a passing trend—it signals a long-term transformation in how India thinks about and interacts with alcohol. And as preferences continue to evolve, so too will the offerings, rituals, and meanings we attach to the drinks we share.- Ends
