[00:03:07] Aswath Damodaran: Well, I mean, it’s when you’re an actor, you want the broadest possible audience.

[00:03:10] Aswath Damodaran: When you’re a teacher, you want to teach the biggest possible class. That’s always been true until about 40 years ago, your classrooms were restricted by physical size. The most I could do is fill an amphitheater at the largest room, I think at nyu, fit 400 people, and I was glad to get that room. I like to teach your class of 400.

[00:03:28] Aswath Damodaran: What technology has done is it’s removed the physical constraint. I no longer have to teach to 400. I can teach to 40,000 or 4 million or 40 million at one time. It might seem like it’s some selfless act, but I’m no Mother Teresa. I’m doing it because I want the biggest possible audience, and from a selfish perspective, technology now allows me the space to be able to reach to a lot more people at the same time.

[00:03:53] Rebecca Hotsko: You have educated and inspired so many people in valuation and what’s also super interesting is [00:04:00] you also make public all of your analysis and your thinking and stock picks, and so it’s just really incredibly informative and insightful to read those. You’ve been doing this for so long. I am wondering who has influenced your personal investing strategy the most?

[00:04:16] Aswath Damodaran: I don’t think it’s a single person, it’s a collection of people because I think one of the mistakes we make is we put human beings on pedestals and we want to be just like them. And I’ll give you the perfect example. Warren Buffet an incredible investor, but people sometimes forget that he’s human. He has his blind spots, and if you do exactly what he does, I’m not sure you’ll deliver the results he got in the 1960s or 70s or the results in the last 20 years.

[00:04:42] Aswath Damodaran: I think what you need to do is take what other people do, take what parts of what they do that work for you, and then create your own philosophy that works for you as a person. So it’s a lesson I actually teach in one of my classes in Investment philosophies class, where I say the right investment philosophy is the one that fits you, not the one that fits Warren Buffet to Peter Lynch is some other great investor in the.

[00:05:05] Aswath Damodaran: Now to be a successful investor, the person you have to understand is yourself. You have to understand your strong points, your weak points, what triggers you, what doesn’t trigger you, and then create an investment philosophy that matches your psychology and your, and your personal makeup as a person.

[00:05:24] Aswath Damodaran: Spend some time know, learn, you know, knowing who you are as a person, because that’s a critical part of becoming a more successful I. 

[00:05:32] Rebecca Hotsko: I think it’s so interesting because we often spend a lot of time studying super investors and we want to learn from their strategies and kind of emulate them ourselves.

[00:05:41] Rebecca Hotsko: But I guess, where do you think investors go wrong when they just maybe copy someone’s strategy like Warren Buffett and where could they improve on that themselves? 

[00:05:52] Aswath Damodaran: Because first, the strategies that those people succeeded with were in a different market, in a different. What worked for Ben [00:06:00] Graham in the 1940s and fifties when he ran those 12 screens worked because in those days, to run his 12 screens, you had to collect the data by hand from annual reports that were really difficult to get to and compute the ratios with a pencil and not even a calculator, right?

[00:06:18] Aswath Damodaran: I mean, it’s a slide rule or whatever you had to. Computing those 12, those 12 ratios that he needed to screen companies was an incredibly difficult thing to do, took weeks to do, which gave him a competitive advantage because most people were unable to do it. Those days are done. If you took what Ben Graham did in the forties and fifties and try it today, when it, when you can run the gram screens in a millisecond online, what makes you think you’re going to walk away with Gram like returns?

[00:06:46] Aswath Damodaran: Same thing with Buffet Buffet’s. Most incredible successes happened in the 60s and the 70s, when first he was a small enough investor that he wasn’t imitated every second of every day like he is today. He had far less money to invest, so you had never price impact and he could do things under the radar.

[00:07:04] Aswath Damodaran: And this was an A in a market where lots of companies were under the radar. You didn’t have the kind of, you know, wall to wall coverage of stocks you have. What worked for Buffet in the 60s and the 70s might not work for you today now. So when you look at the most successful investors, remember their successes of product, of what they brought to the table, which are substantial, the times they were in and the markets they were worth.

[00:07:26] Aswath Damodaran: And if you take one of those three out, you can try to replicate everything they do and have nothing to show for it. 

[00:07:33] Rebecca Hotsko: I think it’s such an important lesson, and I’m really glad you talked about that because we study, like we spend so much time studying what they’ve done, and some people even like to take the approach of just copying what they buy, but our outcome could be vast.

[00:07:48] Rebecca Hotsko: Different, and like you just talked about, what worked for them back then. Things are different now, and so we can learn certain things about maybe how they valued the businesses and there’s important lessons to take away. But I think today it’s, you have to really think about what philosophy fits you, right.

[00:08:05] Rebecca Hotsko: One thing I wanted to ask you. I interviewed David Rubenstein a while ago, and he talked about super investors and how they became great and they were really a master at their craft. They were amazing at one thing, and they stuck to that. And so I guess I’m just wondering, do you think that applies to investing today?

[00:08:22] Rebecca Hotsko: Do you think in order to be successful in investing and be stock pickers, we need to become a specialist in one area and just stick to 

[00:08:30] Aswath Damodaran: that? I don’t think so. I mean, I think specialists are doom for failure in this market because they have tunnel vision and they’re incapable of looking past their specialty.

[00:08:40] Aswath Damodaran: In fact, I think you have a much better shot of succeeding and investing, if you can see the big picture, big picture in terms of looking at what happens across companies, not just near market, but geographically across markets. Not just stock markets, but bond markets and crypto markets. Because I think having that perspective is what’s going to give you an advantage.[00:09:00] 

[00:09:00] Aswath Damodaran: You get, get into the specialist game, you’re going to be playing against other specialists and you’re all going to lose. There’s no way any of you is walking out of this a winner. So I think first, be a generalist, not a specialist. Second, find a philosophy that fits you, that you truly believe in. And that’s critical is, you know, you keep switching philosophies because they don’t work for you.

[00:09:20] Aswath Damodaran: You don’t have a philosophy. And most portfolio managers, in my view, don’t have a core pH. One of the things that these super investors have is they have a core philosophy. A philosophy. They go back to not a strategy. Buying low pe racial stocks is not a philosophy. That’s a strategy. You need a philosophy which involves where you think markets make mistakes, why you think they make those mistakes, and what will cause those mistakes to get corrected.

[00:09:47] Aswath Damodaran: Those are three critical parts of the philosophy because every investment philosophy is built on a premise that markets make mistakes in certain scenarios. Be clear about what those scenarios are in your mind, and the reason they make those [00:10:00] mistakes can be behavioral because people have psychological quirks that make them make those.

[00:10:05] Aswath Damodaran: It could be data driven because in certain scenarios the data might not be available, but you also need some part of your philosophy that explains why those mistakes will get corrected. Because remember, you don’t make money fi by finding mistakes. You make money from those mistakes getting corrected.

[00:10:23] Aswath Damodaran: So when I talk about investment philosophy, I’m not talking about do you buy low PE stocks? I’m talking about your thinking about markets and investing that’s leading you to buy low pe. Because the difference is you buy low PE stocks and they make money great for you, but that might not work 10 years from now.

[00:10:39] Aswath Damodaran: If you have a core philosophy, you can go back to it and find a different strategy that works. So one of the things that you will find that great investors have in common is they have a co. They each have a core philosophy that they go back to. You talking about George Sorrows or Warren Buffet? Very different investors.

[00:10:57] Aswath Damodaran: Each has a, a philosophy that [00:11:00] works for them. Very different views and markets, but they both found a way to make it work. But there’s another ingredient that we don’t like to talk about because it makes us uncomfortable, which is a big part of being a great investor, is being. And let’s face it, you could run an experiment.

[00:11:16] Aswath Damodaran: We can go back in time and restart the Warren Buffet experiment. But in the first three years of investing, it turns out that the timing was off. The markets were off. He didn’t make money. People in his partnership withdrew all their money. He’d be writing a very different history today. Right? Let’s not underestimate the role that luck plays in the investing game, because you make us all hump.

[00:11:38] Aswath Damodaran: It should make, and that’s why I think the very best investors, if you ask them why did you succeed, will attribute a big chunk of their success to being lucky. Being at the right place at the right time. Because that’s something that you cannot put into your practice. So you could do everything right, but we are not lucky.

[00:11:57] Aswath Damodaran: You get a bad start. You’re never going to get that [00:12:00] successful track record that the people who got lucky ended up having. 

[00:12:04] Rebecca Hotsko: That was so great to hear you explain it like that. I know you said you have a whole class on this, but I’m wondering if you have an example of a philosophy, maybe your own or just one that’s well known that our listeners could hear so they know what it kind of sounds like, and then they can go think about, use all those steps you just described to figure out their own.

[00:12:26] Aswath Damodaran: Let’s take growth investing as a philosophy. Peter Lynch was a growth investor. Growth investing as a philosophy is built on the premise that markets make mistakes in valuing growth. Why do they make mistakes? There’s a lot of uncertainty about growth and when there’s a lot of uncertainty, people tend to take shortcuts.

[00:12:44] Aswath Damodaran: They often do, don’t do their homework. Growth investing is built on the premise that valuing growth at a company, people are more likely to make mistakes than valuing existing assets. Things that a company has already. And in growth investing, you also believe that if you can [00:13:00] find a way to value growth better than investors, either because you’re willing to deal with uncertainty or put things down on paper, then you will over time make money by being better at valuing those growth assets in the marketers.

[00:13:13] Aswath Damodaran: Peter Lynch’s core philosophy was people don’t make, make mistakes on mature companies. They make their biggest mistakes on growth companies, and most people who invest in growth companies are traders. They really don’t care about the value of growth. They’re just betting on price momentum. And if you are willing to do the work on these growth companies of talking to the management, gauging which of these growth companies have valuable growth, then you can find a way to make money.

[00:13:38] Aswath Damodaran: And he built an. Career, a reputation on finding those growth companies. And he stayed true to it. Cause along the way, he invented his version, the peg ratio that you see now in markets. Now, Peter Lynch invented the first version of that where he looked at the change in the PE versus the growth rate. That was the metric he used, but that’s not what made him successful.

[00:13:59] Aswath Damodaran: It his core [00:14:00] philosophy that growth companies are where you make mistake. So that’s the example of a philosophy. Thinking through what you’re investing in, why you think markets make mistakes in that area, and what causes the correction happen. The case of Peter Lynch, he said The correction will come when these companies that I’ve picked deliver growth and deliver it efficiently.

[00:14:20] Aswath Damodaran: Markets are going to see the reality and that point, they can’t avoid it. They’re going to increase the price of the stock, and I’m going to make money. That is a philosophy where you’ve thought through market mistakes and how the mistakes get corrected, and then you build a strategy to take advantage of those mistakes.

[00:14:36] Rebecca Hotsko: That was incredibly helpful. Thank you so much for sharing that. I would love to get into your valuation process now because there are different ways that investors can approach valuation. They can really make it simple or as complex as they want, and I think the challenge is both properly analyzing the business you’re looking at, and then translating that into the right numbers and [00:15:00] forecasts.

[00:15:00] Rebecca Hotsko: And so I want to cover both aspects. The art and science evaluation with you. Starting on the analysis side when we’re doing our research. In your book, the Little Book Evaluation, you talk about how valuation really starts with value drivers. So I was hoping you could start out by talking about what value drivers are and how we can apply this to our valuation analysis.

[00:15:22] Aswath Damodaran: Every business can be captured on three dimensions and the quality of the business. The growth part is captured in revenue. Require revenues because it’s the most honest me metric of growth. You can increase net income or earnings by cutting costs, but increase revenues. You either have to sell more items or charge higher prices.

[00:15:40] Aswath Damodaran: So revenue growth captures a growth part of your business. The profitability part of your business is captured in your expected margins. Over time, the higher margins, more profitable business. The third leg is a little more difficult and a little more, little less direct, but you need to ask questions about it, which is, how much would I do I need to reinvest to get that revenue growth?

[00:15:59] Aswath Damodaran: [00:16:00] It measures the efficiency with which you deliver growth. The reason that matters is growth by itself is neither good nor bad. It can add value. It can destroy value. You can grow and destroy value. As a company, we have to reinvest huge amounts as a company, as an extreme example, think of how much damage Facebook is doing to itself with its plans to grow in the Metaverse.

[00:16:19] Aswath Damodaran: because right now what people see is a hundred billion dollars that the company’s going to invest, but they don’t see much coming back from that a hundred. So revenue growth, operating margins, and a measure of efficiency. How much revenues to get a dollar of capital capture the business part of your company.

[00:16:36] Aswath Damodaran: Of course there’s risk involved and you gotta bring the risk in, and this isn’t some coming from some metric or model, it’s coming from common sense. If you’re investing in a business worth more predictable cash flows, you’re going to be okay settling for a lower rate of return. Then if the cash flows are less predict.

[00:16:52] Aswath Damodaran: We capture that risk in two variables. One is with a discount rate, something you need to make on a company to [00:17:00] breakeven. That’s all a discount rate is, and there are lots of models you can use, but don’t get lost in models. Riskier businesses should have higher discount rates because you need to make a higher return to breakeven.

[00:17:10] Aswath Damodaran: The second variable is something people forget, which is for your business to have all this potential and deliver value. It’s got to survive. Companies sometimes, A young growth company, it could have the most incredible potential on the face of the earth, but if it doesn’t make it through the next three years, you’re never going to see that potential.

[00:17:29] Aswath Damodaran: So to me, the two risk variables are, one is the discount rate, and second is some measure failure risk. Those five variables pretty much are the drivers of value, revenue growth, margins, that reinvestment measure, and a discount rate and a failure risk. And every business can be captured with those five variables.

[00:17:46] Aswath Damodaran: And your job in intrinsic valuation is to try to figure out from the facts you have and the data you have, your best estimates for those five variable. And 

[00:17:56] Rebecca Hotsko: I guess one of the things that you talk about in your [00:18:00] book, and one of the problems we face in analysis today is not that we have too little information, but way too much.

[00:18:06] Rebecca Hotsko: And so I think this gets relevant as firms are getting more complex outside the traditional business models. I think often we don’t know where to start or how to simplify the valuation process and determine what’s important. And so in simplifying the process and determining. Necessary versus what’s noise.

[00:18:24] Rebecca Hotsko: Would we be focusing just on those four things that you talked about or is there a little bit more to that? 

[00:18:32] Aswath Damodaran: There’s nothing more. Everything is going to be relevant now. I can’t think of a single thing that happens at a company that doesn’t affect one of those five. And in fact, I challenge my students to come up with qualitative variables.

[00:18:44] Aswath Damodaran: Soft variables. Cause I say, what about this? And I say, Hey, if it matters, it’s going to be in one of these variable. To me, the essence of being good at valuation is to find a way to take everything you hear about a company, however soft and however qualitative it is, and say, [00:19:00] here’s where it’s going to show in the valuation, because it has to shop in one of those places.

[00:19:05] Aswath Damodaran: It’s actually a great way to challenge people on buzzword when they say this matters here. Where does it matter? How does it show up? It’s the mechanism I use to expose E S G for what it is, which is a toxic, empty concept. Because know people talk about E S G, and I’ve heard advocates say it’s good for value.

[00:19:20] Aswath Damodaran: Say, okay, tell me where. By being good, am I going to grow faster? Show me the evidence. Don’t gimme anecdotal evidence. Will it allow me to have higher margins? Explain. Will it make me reinvest less and my factories less expensive to build because I, I’m a good company. My challenge on any concept that people throw any soft idea is to convert that idea into a number.

[00:19:43] Aswath Damodaran: In my valuation, they cannot. I’m going to tell them, Hey, stop distracting me. This doesn’t change my value. I’m not going to waste my time and my resources delving deeper here, I’ve got to go and deal with the things that matter. In fact, I would wager out of every hundred pieces of [00:20:00] information you get about a company, five Matter 95, Don.

[00:20:04] Aswath Damodaran: The essence of investing is to figure out what matters and what doesn’t. If you can do that well, you’re already 90% of the way towards being good at valuation because it’s so easy to get distracted by things that don’t matter. 

[00:20:17] Rebecca Hotsko: And I think the challenge is when we’re putting this in a model and we’re trying to arrive at our intrinsic value assessment, there are different ways we can get there.

[00:20:27] Rebecca Hotsko: And so one is free cash flow to the firm, free cash flow to equity. 

[00:20:31] Aswath Damodaran: They’ll all get you to the same place if you do it right. So my advice is pick a mechanism that you are comfortable with. If free cash for the firm is what you feel more comfortable doing, stay with it. If you are working in, and it’s not just me, no mechanisms, you should have value a company in into US dollars or euros.

[00:20:47] Aswath Damodaran: You’re going to get very different inputs. Pick a currency, pick an approach that works for you. Just do it right. Don’t do five different dcfs, all of which are screwed up because you’re doing each of them incorrectly. And [00:21:00] expect them to give you an answer. You can act. It’s really ultimately value driven by cash flows, growth and risk.

[00:21:07] Aswath Damodaran: Now, how you converted it to a dcf, you can look at just the equity investors in the company, which is free cash flow equity, or you can look at all investors in the company, but you’re asking the same question. The one dimension on which you can, you can push the model is you can ask, should I be looking at the cash flows I actually get, or should I be looking at these hypothetical cash flows?

[00:21:28] Aswath Damodaran: Three cash flows after all in a sense, are your estimates of cash flows, but there is a cash flow you get directly from the company, which is dividends. It’s a model that predates three cash flow models. It is a free cash flow equity model, but you’re assuming companies pay out what they can as dividend.

[00:21:44] Aswath Damodaran: So when use a dividend discount model, which some people still do, you’re effectively saying, look, I don’t want to estimate the free cash flow equity because I have to make assumptions. So I’m going to look at the number, the cash flow they actually gave me and use that as my basis. I understand that, but we do know with [00:22:00] beyond any doubt that companies don’t pay out what they can afford to earn.

[00:22:03] Aswath Damodaran: How do we know? But all you have to do is look at the cash balances, right? You don’t end up with 150 billion cash balance through. So the dividend discard model is the simplest and most direct intrinsic valuation model, but it does lead you to trust management payout, what they can afford to, and that can be a dangerous place.

[00:22:23] Rebecca Hotsko: And I guess on the growth rate, what do you see as the most common mistakes people make when they’re estimating the future growth rates of, say the cash flows or something? 

[00:22:33] Aswath Damodaran: They act like they’re in a silo. That every, that everybody else in the world is stupid. Every other company is not acting, and only their company is mapping out a pathway to the future.

[00:22:43] Aswath Damodaran: It’s human nature. When you value company, you say, well, they’re going to do this. That’s amazing. That’s going to increase their growth rate. What if everybody else does what they do? So when people talk about their automated driving is what’s going to sh, you know, save the right sharing companies. If only Uber does it, maybe it will.

[00:22:59] Aswath Damodaran: But if Uber [00:23:00] and Lyft and Didi and grab and Ola all do it, then what happens? I think we need to bring in some gain theory into valuation and realize that when companies make changes, changes in pricing, changes in policy, the rest of the world doesn’t just sit still and let them do it. They respond, and you’ve got to build in those responses.

[00:23:20] Aswath Damodaran: When you value companies, it makes life a lot more difficult. But it makes it much more realistic. It’s a mistake I see analysts making on growth rates. Often we know conclusively that analysts estimates of growth and earnings, and they often estimate growth and earnings per share, not in revenues. Growth and earnings per share at individual companies are biased upwards.

[00:23:39] Aswath Damodaran: Why? Because they look at their company, they see all the special things a company does. They listen to the management, they give it high growth. But if there are 15 other companies doing the same thing, they can’t all grow at that rate because the market’s not big enough. One test of whether you’re being realistic is if you start adding up the growth rates across companies and look at [00:24:00] the size of the market, you will need to justify those growth rates across all companies.

[00:24:04] Aswath Damodaran: You very quickly realize that the market is not big enough to justify all of those companies growing at those growth rates. It’s what I call the big market delusion. Especially prevalent when you’re seeing a market kind of become a big growing market. China, 20 years ago, soc, an online advertising 10 years ago, AI and cloud computing.

[00:24:24] Aswath Damodaran: Today, people tell a big macro story and they assume that if you are in that space, you’re going to make money. It’s what I’m going to call the Kathy Wood Delusion, which is every single company in our portfolio is justified by the fact that it’s in a market, a macro market that’s grow. She’s got that part of the story, right?

[00:24:42] Aswath Damodaran: She’s very good at predicting macro markets. What Ark and Kathy, what are not good at is looking at individual companies and asking the question, why should this company be the winner in this part? So we can all agree electric cars are the wave of the future, but why should Tesla be the bet that I [00:25:00] make at its pricing?

[00:25:01] Aswath Damodaran: You could believe that crypto is going to be the growth of future, but why Coinbase as the trading platform? We need to ask questions about individual companies, their competitive advantages. I mean the birds of value investing, the moats that they bring to the game, and not just reward them for being in big, growing markets and attaching high prices just on that basis.

[00:25:23] Rebecca Hotsko: Another aspect you mentioned that’s super important to the valuation analysis is the discount rate. And so there’s been, I guess a couple ways that we can estimate this and forecast how risky these cash flows are, which is one I’ve heard people use that. Use a constant discount rate. So they think of it like, I want to earn 10% from this investment.

[00:25:45] Rebecca Hotsko: So they use a constant 10% required return as their discount rate. And if the value ends up being lower than the price, then they would buy it because with that discount rate, they think they get a good expected return with the margin of safety. Then the other [00:26:00] approach that’s taught in finance classes and the CFAs to think about how risky those cash flows are, and then it requires using a lot of estimates and a lot more assumptions than that first 

[00:26:11] Aswath Damodaran: approach.

[00:26:12] Aswath Damodaran: Let me reframe the choices. The choices are between what you want to make and what the market needs to make. That’s really the choices. I mean, when you talk about the Cap am arbitrage pricing model, they’re all pathways to figuring out what other people need to make on this company to break even. The reason what you want to make should never enter the process is the same.

[00:26:33] Aswath Damodaran: People who want to make 10% probably also want to be 20 pounds lighter. They want to be 10 years younger. You can’t, what you want is not what drives. When you think about the intrinsic value of a company, it’s based on what investors collectively attaches price. Because you could say, I want to make 10%, but if the rest of the world says, we’ll settle for 6%, well, guess what?

[00:26:54] Aswath Damodaran: The pricing and the value of the company is going to reflect the 6%. You can choose not to buy the company. I’m not saying I’m going [00:27:00] to force you to buy the company and earn 6%, but you can’t impose what you think you need to make because that’s a number you made up out of whatever, and bring it into every valu.

[00:27:11] Aswath Damodaran: So it’s not really a choice between constant and different discount rates or your discount rate and a models discount rate. It’s a choice between do you want an intrinsic value of the company? You should be based on what investors in the company need to make on that company to break even. And if it’s an intrinsic value you’re looking for, then you need to come up with a discount rate for a company based on what other people are making on similar risk investments today.

[00:27:34] Aswath Damodaran: That’s really what all of these models try. When you carry, you use a beta, you know, you’re basically saying, oh no, I can make a similar return on other investments of equal betas. So really the choices between you making up a number, in which case I don’t think you should be doing intrinsic valuation in the first place.

[00:27:50] Aswath Damodaran: Just stick with pricing and move on. Or do you want to get an intrinsic value for the company? And if you decide to go the intrinsic value route, you have no choice but to come up with a [00:28:00] rate that other people will need to make on the company. And guess what? If you’re investing in Apple, guess who those other people who are setting the rate of return on Apple are?

[00:28:08] Aswath Damodaran: They’re going to be BlackRock and State Street and Fidelity and Vanguard. Because they’re the ones who, the big institutional investors and they tend to be diversified. And it the reason we end up with the models that we do where only the risk, you cannot diversify where ends up in the dis contract.

[00:28:23] Aswath Damodaran: It’s not because I assume you’re going to be diversified, it’s because the rest of the world is basically pricing the company from a diversified investor standpoint. And if you choose not to be diversified, you’ve read too many books on concentrated value investing, and you think you should hold only three stocks, that’s your problem.

[00:28:41] Aswath Damodaran: Don’t expect the market to give you a higher expected return. Because of that, you gotta figure out a way to earn that higher return, because you’re such a good picker of stocks. But intrinsic valuation is really about what is the fair value of the company in the market today given the price of risk in the market.

[00:28:57] Aswath Damodaran: That’s really the question I’m trying to answer. You [00:29:00] can then choose not to buy that stock because you need to make 15% returns. But guess what? If you adopt that strategy, accept the fact that you’re going to be holding a lot of cash for long periods, because you arbitrarily set a rate of return, that is a return.

[00:29:14] Aswath Damodaran: The market is not delivering. 

[00:29:17] Rebecca Hotsko: That was really helpful. I think that, yeah, you explained that so well and that’s something I’ve been wondering for a while because if we picked this arbitrary number, even if it’s higher than the cost of capital actually is, it could go south at some point in our. 

[00:29:31] Aswath Damodaran: The nature of intrinsic is the discount rate should reflect.

[00:29:34] Aswath Damodaran: The risk of the company should be reflecting your risk aversion or what you thought. So this is nothing to do with you. That’s something people need to remember about intrinsic evaluation. So this is why even if you have a three year time horizon, people say, well, if I have a three year time horizon, should I just do cash flows for three years?

[00:29:52] Aswath Damodaran: This has nothing to do with you. It’s got everything to do with the company and its intrinsic value. You can then decide to trade based on what’s good [00:30:00] for you. That’s, that’s the only part of this process you control. Should I buy or not buy? Should I sell or not sell? You can’t change the intrinsic value of a company by feeling more risk averse or less risk averse.

[00:30:12] Aswath Damodaran: What investors collectively feel will affect that, but that’s what you’re trying to capture in the intrinsic evaluat. 

[00:30:19] Rebecca Hotsko: I guess one more quick technical question, so as we forecast our years out, is there kind of an optimal amount of years we forecast out? because we know the longer we forecast our estimates are likely going to be, they could more room for error the farther we go 

[00:30:34] Aswath Damodaran: out mathematically.

[00:30:37] Aswath Damodaran: You don’t have to forecast if you have a company that’s already mature, company, mature in the sense you’re growing at a rate roughly. Forecasting has nothing to do with uncertainty or precision. It’s got everything to do with how close your company is to being a mature company where you’re willing to tie things down and say, Hey, you know what?

[00:30:53] Aswath Damodaran: I can estimate the value of the company because things have settled down. When you Coca-Cola, you could probably value it, but two [00:31:00] years of forecast. Why? because companies close enough to steady state that you can say, you know what? I didn’t use two years to fix these two issues in the company. That it’s trying to increase its debt ratio and perhaps pay out more in dividends.

[00:31:12] Aswath Damodaran: But if you’re valuing a company like Peloton, you’re probably going to need a lot longer because a company’s still working out what its business model is going to be. It can’t decide whether it’s a subscription company or a fitness equipment company, and until it decides that you can’t put it into steady stay.

[00:31:28] Aswath Damodaran: So how long you have to forecast cash flows again, has nothing to do with your pre elections as an investor or your life time horizon as an investor or on how uncertain you feel. It’s quite, again, everything to do with the company. It goes back to the point I made. Don’t think about what makes you comfortable or uncomfortable.

[00:31:45] Aswath Damodaran: Think about the company and trying to estimate an intrinsic value, because that’s going to drive many of the parameters you estimate along the. And 

[00:31:53] Rebecca Hotsko: I think one thing that is ingrained in the minds of value investors, some who might follow advice of Warren [00:32:00] Buffet, is that once they buy a stock that they believed was undervalued, they want to hold that forever and they don’t sell because in their mind they have these stocks as hold forever, stocks as Warren often calls them.

[00:32:11] Rebecca Hotsko: And I know that you take a different approach and that you have no problem selling. And so I was just wondering if you could talk about why you don’t share that same hold forever mentality. 

[00:32:21] Aswath Damodaran: Because if you’re, if you’re a value investor and you buy because something is undervalued, how can you, with a straight face tell me that you will still hold it when it’s overvalue?

[00:32:31] Aswath Damodaran: I mean, I, I, you can’t be consistent one half of the process and not the other. So my view on value investing is I buy something because the price is less than the value. But let’s say I put a 20% margin of safety, why isn’t it analogous that I should be selling that same thing when prices? I mean, it’s a mathematically, there’s no difference, right?

[00:32:52] Aswath Damodaran: It’s just a sequencing of when you buy and when you sell. So to me, it seems internally inconsistent to claim to be a [00:33:00] value investor and then say, I’m going to buy and hold forever. Because there’s some companies you might hold for the long term because their value goes up proportionately with their price.

[00:33:10] Aswath Damodaran: Remember, your value will change over time as well, but if your value goes up only 20%, the price goes up 200% guess. You should probably leave and move on. There’s no point holding on to this because I don’t see the benefit. 

[00:33:24] Rebecca Hotsko: So then how often should we revisit our valuation analyses? Is there an optimal time you think?

[00:33:32] Aswath Damodaran: Probably every year. Right. Every time something big happens at a company, you have no choice but to revisit it. There’s a reason active investing is hard work, right? It’s not just find something undervalued by and forget about it. You got to revisit that investment every year in your portfolio’s sake. I mean, every investment in your portfolio has to re-earn the right to stay in your portfolio every year.

[00:33:55] Aswath Damodaran: That’s the way to think about. Obviously I don’t want to build up and do all of my [00:34:00] valuations at one point in time, so I try to stagger them over the year. But I think that you need to take a, keep looking at your investments in your portfolio asking is it time yet for this to leave? Because if you don’t do that, you’re going to end up with a lot of deadwood in your portfolio where you look at, I wish I had sold you seven years ago when the stock price was 10 times what it is.

[00:34:20] Rebecca Hotsko: I think that’s something that’s maybe misguided when studying his strategy because it’s talked about a lot. It’s once you buy that, I’m buying that because it’s a hold forever. And what you said rings true. 

[00:34:33] Aswath Damodaran: There’s a selection bias too, right? Let’s say 20 people Start with Warren Buffett’s philosophy.

[00:34:39] Aswath Damodaran: I’m going to just buy and hold. At the end of 30 years, you picked the two most successful of those 20 investors. And guess what you’re going to find The buy and hold strategy worked really well because this is selection bias. You know how you compare buy and hold strategies. You take the investors 20 or 30 years ago who all told you to buy and hold and great reputations and as value investors, and then [00:35:00] you track what happened to them by and hold investments over the last 30 years.

[00:35:04] Aswath Damodaran: I’ll wager you’ll see a lot more shak. Even Warren’s track record, if you look at his buy and hold in, almost every one of his successful buy and hold investments come from the pre 1990s Coca-Cola, Washington Post. And they’ve had their ups and downs along the way. Almost nothing that he’s invested in the last 20 years.

[00:35:23] Aswath Damodaran: I look and say, you know what, that was a great buy and hold strategy. In fact, he’s sold some of his, so, you know, even within his portfolio, he’s clearly willing to. And I think one thing people have to stop thinking about when they look at Berkshire Hathaway is, Warren Buffett’s not there picking stocks anymore and he’s 90 years old.

[00:35:40] Aswath Damodaran: Give him a break. Let him live, you know, live out the rest of his life. If you think he had any role in picking Snowflake for that portfolio, I would challenge you to shop at the next Berkshire Hathaway meeting and ask him a question. What does Snowflake? Why did he buy it? I don’t think he had any role in it because it’s not his fault.

[00:35:58] Aswath Damodaran: Eight years ago he did, [00:36:00] he actually was pretty open about the fact that he turned over the stock picking at the company to Todd Comb and others and he said, look, I’m moving on. But people still, still think when Berkshire Hathaway buys a company, it must be Warren Buffett’s decision. I don’t think it is anymore, and I think we need to let go of that.

[00:36:16] Aswath Damodaran: Stop following everything Berkshire Hathaway does, as if it was a buffet pick. We’re. 

[00:36:22] Rebecca Hotsko: I guess one thing that I really struggle with sometimes when going through this process, trying to find undervalued companies, just being super aware of my limitations as an investor, and I know one of my guests brought this up in a previous interview where most trading done in stocks is by active investors or institutions.

[00:36:40] Rebecca Hotsko: I think it was 90%. And so his words were, if you sell a stock or if you want to. Stock, someone’s selling it to you at the same price, and chances are it’s an institutional manager. And so I always grapple with this thought of what would I know that they didn’t already exploit to drive up the price to its intrinsic [00:37:00] value today?

[00:37:01] Aswath Damodaran: Well, the reality is institutional investors wouldn’t know intrinsic value if it kicked them in the face. And the mo, the moment they’re sheep. I mean, if you think institutional investors are deep thinkers who somehow estimate intrinsic value and make informed decisions, you haven’t tracked how they behave.

[00:37:16] Aswath Damodaran: Do you know during every crisis the people who panic the first are not retail investors, it’s institutional investors, the people who sell into crises, worst culprits, institutional investors. So I think you should be glad when you’re trading in institutional investor because you’re probably trading against momentum.

[00:37:32] Aswath Damodaran: That’s pretty much what you’re trading at. 95% of institutional investing trading is driven by momentum shifting, at least in their mind. So if you’re a trader, you watch institutional investing a great deal more than if you’re an investor. If you’re an investor, the fact that institutional investor selling is really good news to you, because that’s probably a good sign for your company that they’re all selling and moving.

[00:37:54] Aswath Damodaran: Don’t worry about the fact that there’s an institutional investor because you are thinking that there’s some brilliant intellectual [00:38:00] genius sitting there on the 19th floor of fi, the Fidelity building. No, it’s just a young trader who’s been told, get rid of this position quickly, because we don’t want our clients to see on December 31st that we were owning Facebook all through the year, through December.

[00:38:14] Aswath Damodaran: You’re going to see a lot of losing stocks being sold by institutional investors because they don’t want the stock to show up in their year end portfolio. It’s a stupid reason to. The damage has already been done. But you know what? As an individual investor, that’s great for me because I can take advantage of their predilection to be on the other side of the transaction.

[00:38:34] Aswath Damodaran: But I think there is a point to be made about activity. It’s a well-established fact, and research backs up that more activity is the most damaging thing you can do to your portfolio. You tell me how often you trade the best indicator for how much you will trail the market by over the long. You trade 500 times a year.

[00:38:54] Aswath Damodaran: I don’t care how brilliant you are, how amazing your trading strategies are. I’ll guarantee [00:39:00] you that after your trading journey is done, you’re going to look back and say, I really screwed up. I mean, now, as you can see, I’m not a great fan of day trading or trading based on little blips in the market. Then you are really at the mercy of being on the other side of more powerful forces.

[00:39:18] Aswath Damodaran: And it’s not even institutional investors, it’s computers. Let’s face it. A computer can see trends faster than you can and can act more decisive than you ever will. You can’t out trade a computer, and that’s what a lot of these day traders are doing is they’re trying to out trade computers. As an investor, I don’t have to fight against a computer.

[00:39:35] Aswath Damodaran: Often I’m going in the opposite direction. So I think for me, computerized trading and all of the additional stuff that’s come with that is a BO because it actually makes momentum stronger in both directions and makes it more likely than that. I will find significantly undervalued and significantly overvalued stocks.

[00:39:54] Rebecca Hotsko: I just have one quick question on that. Do you think that retail investors have a certain [00:40:00] edge in different markets? So you mentioned that we kind of, we shouldn’t worry about institutions, but typically they go for the very large cap. Well covered stocks. Do we even edge there? Or maybe more so in small 

[00:40:10] Aswath Damodaran: cap?

[00:40:11] Aswath Damodaran: I think they’re everywhere. And if you, if you don’t believe me, take, take a small cap stock, pick the top 10 investors in the company. Guess what? You’re going to find a bunch of investors. It’s very difficult to find companies that are primarily held by retail investors. To me, there’s really no there.

[00:40:27] Aswath Damodaran: There’s no easy place to go in the market to make money. I would argue that maybe 30 or 40 years ago you’d have been right. Small cap stocks were probably ignored, less forwarded, and you potentially could make higher returns. In fact, for the much of the last century, there was this well established finding that small cap stocks earned a premium called the small cap premium over the market three 4%.

[00:40:51] Aswath Damodaran: That ended around 1981. Since 1981, small cap stocks have earned roughly the same return as large cap stocks in the market. It’s gone. And one of the [00:41:00] mysteries is what happened. And I think what happened was now you got institutional investment kind of permeating the process. Any potential advantages you thought you might have investing in a small company are now gone.

[00:41:10] Aswath Damodaran: You gotta 

[00:41:10] Rebecca Hotsko: look elsewhere. Yeah, I just read a great book on how the factor premiums can go away because they get, once they’re published, everyone knows about them, and then the premium leaves. 

[00:41:21] Aswath Damodaran: Many of these factor premiums is accidents in history, right? Because we think about how data works. I give you a hundred years of data and I give you 200 potential factors, and you guys start testing them up almost purely based on randomness.

[00:41:35] Aswath Damodaran: 10 of those factors are going to explain returns, not because it had anything to do with. But because they happen to be correlated with something, it’s like the Super Bowl indicator. You’ve probably seen that the AFC team wins. It’s bad for the market. The N FFC team wins. It’s good for the market. We know it’s complete nonsense, but if you allow enough indicators, I can come up with 50 indicators.

[00:41:55] Aswath Damodaran: Factors are very much the same way. One of the big questions, and this is something academic finance [00:42:00] has not dealt with very well. Recently people have started asking questions is how much of all of this established research that we have on small cap stocks, low price to book stocks, working, how much of that is this?

[00:42:13] Aswath Damodaran: A combination of people having too much data, too many people looking at too much data, looking for results. Because remember, to get published, you need statistical significance. So if you have a thousand researchers looking at the same database and you try one thing and it doesn’t work, you try another thing and another.

[00:42:30] Aswath Damodaran: Sooner or later, you’re going to keep finding more and more things that are statistically significant. You’re going to get them published. There are going to be some people who actually think this is a way to make money. They’re going to invest based on it, and 10 years later they’re going to look back and say, how come I’m not making money?

[00:42:43] Aswath Damodaran: It’s the story of academic research, not converting into practitioner returns is maybe a lot of this reflects the way academia gets published and what gets published in data. I’m cynical about academic research. I would never invest based on an academic [00:43:00] paper claiming to make access returns simply for that reason.

[00:43:03] Aswath Damodaran: Because I know the process by which a paper gets to that stage of being published, and I’m not sure it’s a good way of finding ways to make money in the. 

[00:43:13] Rebecca Hotsko: That’s really interesting to hear you talk about that because I personally take quite an academic approach and it’s just from going through this formal schooling and it coming out of the C ffa and I just, yeah, kind of that academic side resonated.

[00:43:27] Rebecca Hotsko: So that’s really interesting to hear you on the other side, 

[00:43:31] Aswath Damodaran: and I think that, no, I work with data all the time. I respect data, but I don’t revere it, which is I understand how many wrong paths data can send me. Because I can see, I, I, I see every day what people do with data, and it terrifies me because if you have biases, you’ll find a way with data to back up those biases.

[00:43:52] Aswath Damodaran: And in investing, what we’ve created is ways in which you can use data to back whatever your preconceptions are. What it [00:44:00] allows you to then say is, look, I’m being scientific. I’m looking at data. I’m not being subjective. I think we need to stop lying to ourselves about how much of our decision making is driven by our priors and preconceptions.

[00:44:14] Aswath Damodaran: If you really, really love a company, you’re going to find a way to buy the company. You can end up doing it with a lot of data, but let’s face it, you made the decision to buy the company before you actually started digging through the data. It’s very difficult to be objective and scientific because you can’t be Investing is too personal.

[00:44:34] Aswath Damodaran: Now, maybe if you were operating in a market we had never heard of any of the companies that you were investing in, maybe investing might be a little more scientific there. Let’s face it, there’s no way you can be looking at Google of Facebook or Amazon or Apple without priors and preconceptions. And the sooner we accept the fact that we have priors and preconceptions, the more healthy the discussion about investing is going to get.

[00:44:57] Rebecca Hotsko: I do have one more question on valuation. I [00:45:00] wanted to ask you, because we know that no valuation process is going to be precise and it’s, we’re going to have to adjust it and it’s going to change over time. But are there any ways that we can improve the odds of our success in the valuation 

[00:45:14] Aswath Damodaran: analysis? I’m going to turn the question back on you.

[00:45:17] Aswath Damodaran: Why is it so imprecise? 

[00:45:20] Rebecca Hotsko: I guess perhaps because it was done at one point in time with very specific 

[00:45:26] Aswath Damodaran: variables. What are you trying in evaluation? What are you trying to do? You’re trying to forecast the future, right? I tell people, look in the mirror and remind yourself you’re not God. That’s a reality.

[00:45:36] Aswath Damodaran: Uncertainty is a feature, not a bug. You can’t make it go away. In fact, I see people trying to come up with ways to make valuations more precise. In a world where surrounded by uncertainty, and I say, what kind of ego must you have to think that if you build a bigger Excel spreadsheet, you can make uncertainty about future pandemics and wars.

[00:45:55] Aswath Damodaran: Go away. Accept the imposition, accept the [00:46:00] uncertainty, welcome it, and treat it as part of. It’ll make your life a lot healthier because I see analysts constantly struggling. That’s why there are easy targets for these sales pitches of they just adopted, your evaluation will get more precise. Just do this, you’ll get more precise.

[00:46:14] Aswath Damodaran: No, you can’t make an uncertain world into a certain world on a spreadsheet. Un uncertainty is part of the process, accepted as part of the process. And just say, look, that’s why I don’t concentrate my p. It’s a lesson as to why concentration, if it worked 40 years ago is even more dangerous now than it was 40 years ago.

[00:46:34] Aswath Damodaran: because how can you pick three companies and tell me you feel so comfortable about these? Not only the, the valuations you have for these three companies, but the fact that a price will adjust to value in these three companies, that you can make that bad. We live in a world where there’s incredible uncertainty coming from macro sources, from micro sources, from technology, from disrupt.

[00:46:53] Aswath Damodaran: I think the lesson I would take out of it is if you’ve had five stocks in your portfolio, have 15 we 10 stocks, make it [00:47:00] 25. You need to spread your bets more because in nature of uncertainties, you’re going to be wrong and you’re going to be terribly wrong in some of these investments and you can’t afford to be terribly wrong in an investment that’s 50% of your portfolio.

[00:47:12] Rebecca Hotsko: And I guess the trick is you want to, you don’t want to be too concentrated, but then if you’re valuing 15 companies, chances are you probably don’t know 15 companies or 20. Amazing. And so are 

[00:47:25] Aswath Damodaran: you valuing at them at the same time? Where do you go from all cash to a 15? Stock portfolio? Investing is a gradual process, right?

[00:47:33] Aswath Damodaran: I mean, you don’t value 15 companies, and in fact, that’s a dangerous thing to do because then you’re making a bet on the market at a point in. I do. I mean, I know dollar cost averaging is a big deal for, I don’t do dollar cost averaging, but I do spread my investing across time because you have no idea whether the market you’re getting into is at its peak, the bottom, the middle, who knows?

[00:47:54] Aswath Damodaran: Investing is about finding undervalued companies at the points in time you find them and adding [00:48:00] them on. And guess what? It takes a little while to get to a portfolio. So my advice when you start being an active investor is start with 90% of your money in an index fund might seem like failure. Find an undervalued stock bite with a 10% and.

[00:48:16] Aswath Damodaran: You find another undervalued stock might take you six months. I don’t get an undervalued stock every week. I’d be terrified of my valuation process. I keep finding undervalued stocks week after week after week, takes me months sometimes to find something that I’m interested in. Six months from now, you find something in, then get rid of 10% year index fund by your second stock over time.

[00:48:35] Aswath Damodaran: But you need to have that anchor of an index fund early on because otherwise you’re going to be putting your money in one or two stocks and that’s a very dangerous place to. It takes patience to actually create an active investing portfolio, but you get there if you’re willing to give yourself time. 

[00:48:52] Rebecca Hotsko: I guess that brings up a question.

[00:48:53] Rebecca Hotsko: I’m wondering what your process looks like then for how companies get on your radar in the first place. [00:49:00] Where are you looking? 

[00:49:01] Aswath Damodaran: And classic one, as you see a stock price drop, 50%. My radar says, is there a good reason? And most people stop there, but I actually value a company based on the information that’s come out sometimes.

[00:49:13] Aswath Damodaran: Most of the time the information was so bad that he say, you know what? I can see what this stock drop 50%, but maybe one time out of 10 I look at it and say, you know what? I brought the bad news in, but I can’t see why that would explain the big price drop. I mean, I know Facebook is a classic example. We know what triggered the price drop was this earnings report that contained bad news and earnings, and this additional announcement that Facebook was going to invest another 90 billion now in top th 10 billion they already have on the metaverse.

[00:49:43] Aswath Damodaran: Unquestionably bad news. I can see why the price dropped, but why so much? Since I’ve had a history of valuing Facebook, I went in and put in those assumptions, and I built in what I call my doomsday scenario, which is, let’s assume the market’s, assuming that this money is going to be completely wasted, [00:50:00] the a hundred billion is going to be thrown into a hole in the ground.

[00:50:02] Aswath Damodaran: That the online advertising business has zero growth left in it. In other words, let me take the bad news and make it the worst possible news. What would the value be? I got got a value actually 5% higher than the stock price with a doomsday scenario, and I said, can’t be that bad when you don’t trust Zuckerberg to deliver value.

[00:50:20] Aswath Damodaran: But until you telling me you’ve found a hole in the ground to throw in a hundred billion, that doesn’t strike me as typical of the company. So sometimes a trigger for a company making it onto my radar is because something bad has happened. There are other cases where a company is made under my radar because I’ve always liked the company.

[00:50:38] Aswath Damodaran: I’ve liked the company because I like the way it’s managed. I like its management. I liked Amazon in 97 when I looked at it in 98 and I looked at it in 99. I looked at it, but I didn’t buy it at any of those times because I valued it at that time. And in spite of liking the company in its management, it just wasn’t undervalued.

[00:50:56] Aswath Damodaran: 2000 actually when I valued the stock was at 84. I valued at [00:51:00] 35, and they said, I’m not buying the company. 2001 after the.com bust, I was trading at $11 per share. I revalued it. I got a lower value than I did the previous year because the economy had gone into recession. There was now what concerns about Amazon making it, but the value I got was 24 down from 35, but the stock was at 11 about Amazon for the first time in 2001.

[00:51:22] Aswath Damodaran: Sometimes companies are on my list because I like the company, but I don’t like it at this price. Investing is about buying at the right price. It’s not buying the right company. It’s about buying at the right price. So to me, sometimes companies make my list because I like to own them, but I don’t like the price they’re at.

[00:51:39] Aswath Damodaran: But I know that if I wait long enough, the market will be right. I had to wait 16 years to buy Google now because it kept being overpriced in my at, at least based on my, my assessment of. 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.

[00:52:02] Aswath Damodaran: 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 saw by recommendation from Morgan Stanley on the company, and literally I don’t have a pH. And if you find yourself constantly bypassing your philosophy because of something you heard on C N BBC or Jim Kramer just recommended the company, maybe it’s time to stop being an active investor.

[00:52:26] Aswath Damodaran: 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. 

[00:52:34] Rebecca Hotsko: think that was a great way to end the show in such great advice for all our listeners because I think we have a lot of homework to do after this episode finding our philosophy, and I’ve learned so much from talking with you today.

[00:52:48] Aswath Damodaran: Thank you. It’s a work in progress. Remember, you never be done, so don’t assume that one day you’re going to wake up with complete clarity. Every day I wake up and I say, what can I learn today? Because it’s a work in progress. And over time you will develop a philosophy, and that philosophy might be that you can’t make money in the market.

[00:53:06] Aswath Damodaran: Be open to the possibility that you’ll wake up to philosophy that says you cannot make money as an investor in this market. You cannot make money as a trader, and that’s a completely healthy place to end. So don’t view that as some kind of failure. It’s actually going to be the most money saving conclusion you might have arrived at as an individual, but leave open that possibility that this is not what you should be doing with your spare time.

[00:53:34] Aswath Damodaran: And I think that’s something that I wish more people decided because I think in the last decade I’ve seen people spend much too much time on markets as confluence of social media. And access to markets has made us far too market focused, and I don’t think that’s healthy. Don’t think it’s healthy for any of the people involved in this process.

[00:53:57] Rebecca Hotsko: I Think that was such a great piece of advice to end [00:54:00] off with, before I let you go, where can our listeners go to learn more about you, your books, everything that you put out? 

[00:54:09] Aswath Damodaran: Probably my website is the central space from which you can get to everything else because almost all of my writing that I do in real time is on my blog using sun markets.

[00:54:18] Aswath Damodaran: It’s a Google blog. You can find it. I also have a substack which has the same post, so that’s them, and so I would say my website and my blog pretty much will be the places you can find me. 

[00:54:31] Rebecca Hotsko: Perfect. Thank you so much again. 

[00:54:33] Aswath Damodaran: Thank you. 

[00:54:35] Rebecca Hotsko: All right. I hope you enjoyed today’s episode. Make sure to follow the show on your favorite podcast app so that you never miss a new episode.

[00:54:44] Rebecca Hotsko: And if you’ve been enjoying the podcast, I would really appreciate it if you left a rating or review. This really helps support us and is the best way to help new people discover the show. And if you haven’t already, make sure to sign up for our free newsletter, We Study Markets which goes out daily and we’ll help you understand what’s going on in the markets in just a few minutes.

[00:55:07] Rebecca Hotsko: So with that all said, I will see you again next time. 

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