Aswath Damodaran~Margin of Safety is an excuse for Inaction in risky times!

Chanced upon this latest from the well known Prof Aswath Damodaran who teaches Corporate Finance & Equity Valuation at the Stern School of Business in New York

Makes interesting reading as he expresses quite vividly the doubt our minds are occupied ,rather tortured with, when engaging in Valuation exercises in uncertain & risky times as now and how we deal with these

Here’s a Sampling of his mind in verbatim:

~”When stumped for answers, we almost invariably turn to others that we view as more knowledgeable or better equipped than we are to come up with solutions. Cynically, you could argue that this allows us to avoid taking responsibility for investment mistakes, which we can now attribute to consultants, text book writers or that person you heard on CNBC”

~”investors and analysts like to use rules of thumb, often with no basis in fact or reality, when making judgments”

~”the more uncertain you feel about individual investments, the more you have to spread your bets. It is not an admission of weakness, but a recognition of reality”

~”I am afraid that the margin of safety, at least as practiced by some in the investing community, has become an empty vessel, an excuse for inaction rather than a guide to action in risky times”

~ “being comfortable with uncertainty may very well be the edge that separates success from failure in investing”

😆 And you got to pat him for this :

~ ” I am wrong a hefty percent of the time, but so what? It’s only money! I am just glad that I am not a brain surgeon!”

3 thoughts on “Aswath Damodaran~Margin of Safety is an excuse for Inaction in risky times!

  1. Never understood why these fundamental investors talk so complex philosophies … I mean read Charlie Munger, I never understood what he says or writes … I mean I am really dumb to understand it … WB is only guy who can tell u lot of things in simple and min words

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