Pod Insights The Prof G Pod with Scott Galloway Prof G Markets: NVIDIA’s Valuation and AI’s Negative Sum Game — with Aswath Damodaran About this episode This week on Prof G Markets, Scott speaks with Aswath Damodaran, professor of finance at NYU’s Stern School of Business, about his valuation for NVIDIA, tech’s rally this year, the implications of AI when every company has it, and opportunities in the markets right now. Follow Aswath on Twitter, @AswathDamodaran.
Learn more about your ad choices. Visit podcastchoices.com/adchoices
Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:01 Scott Galloway? Support for the show comes from Northwest Registered Agent. Your business identity is everything that makes your business legitimate and professional. With Northwest Registered Agent, you don't just form a business, you start a complete foundation built for privacy, credibility, and growth. That includes registered agent service, a business address, operating agreement, domain, website, professional email, phone number, and built-in privacy. In other words, your home address, personal email, and phone number stay private. Don't pay hundreds or thousands of dollars for what you can get from Northwest for free. Visit northwestregisteredagent.com/profgfree and start using free resources to build something amazing. Get more with Northwest Registered Agent at northwestregisteredagent.com/profgfree.
0:49 Speaker 01 If you're looking to hire, you need Indeed. With Indeed Sponsored Jobs, you can spend less time searching and more time actually interviewing candidates who check all your boxes. Less stress, less time, more results. And listeners of this show will get a $75 sponsored job credit to help your job get the premium status it deserves at indeed.com/podcast. Just go to indeed.com/podcast right now and support our show by saying you heard about Indeed on this podcast. Indeed.com/podcast. Terms and conditions apply. Need to hire? This is a job for Indeed Sponsored Jobs.
1:33 Scott Galloway? This week's number, 500,000. That's the record number of passports the US Department of State has issued per week this summer to meet increased travel demand.
1:52 Scott Galloway? Welcome to Prop G Markets. We're excited to bring you a conversation with, I think, one of our first five-time guests, Aswath Damodaran, professor of finance at NYU Stern. We discussed with Aswath his valuation for Nvidia, AI winners and losers, and his thoughts on Texas' historic rally in the first half of the year. Ed, any takeaways from Aswath?
2:11 Ed Elson? I'm just always shocked by how informed he is on basically any stock pick. I mean, you could put any company in front of him.
2:17 Scott Galloway? Anything.
2:18 Ed Elson? And he has such an informed view. And, you know, he's not just looking at multiples. He's building out his own DCF models and coming up with opinions based on that. And then the other awesome thing is that he's almost always right. I feel like I've never seen a take from him that I thought was irrational or not sensible. And it always feels like it works out. I mean, I feel like he was the one who at least partly inspired our position on Meta, that it was undervalued last year. And so I'm just, I love him.
2:52 Scott Galloway? Trivia question, who was the first guest on the David Letterman Show?
2:55 Ed Elson? No way I would know, but may I, may I guess Aswath?
2:59 Scott Galloway? No, it wasn't Aswath. It was Bill Murray. So Aswath is our Bill Murray, because he was the very first guest on the Prop G pod from the Rosewood MyCoba in the midst of COVID, when I had basically packed my go bag and grabbed my family. Aswath was the first guest on the Prop G show. Anyways, enjoy our conversation with Professor of Finance Aswath Damodaran.
3:30 Scott Galloway? Aswath, where does this podcast find you?
3:33 Aswath Damodaran? San Diego.
3:33 Scott Galloway? San Diego, that's right. Quick story about San Diego. My, I was born in San Diego because my parents, who were living in Toronto, read in the newspaper that San Diego had the nicest weather in North America. So they loaded up their mini metro when my mother was seven months pregnant. And two months later, born in San Diego. So congratulations on living on, in the city with the best weather in North America.
3:56 Aswath Damodaran? Today's high is 70, today's low is 62. So kind of a sweet spot there.
4:00 Scott Galloway? See above San Diego. So first half of the year, the best year for the NASDAQ in 40 years. Just globally, what are your thoughts about the market and what feels like? Just sort of a run up that's just sort of snuck up on us.
4:16 Aswath Damodaran? I think part of it was a bounce back from last year where I think investors overreacted on tech companies, knocked their prices down too much. And some of this has come back. I mean, it is highly concentrated. The companies that have come back the most are tech companies, bigger tech companies that make money. This is not a full comeback of risk capital in the traditional sense where people are piling into everything tech. It's a very selective run up in tech companies. So there's been a redistribution of value among tech companies from money losing smaller tech companies to money making larger tech companies. So it looks like a tech comeback, but it's a very different comeback than the drawdown we saw last year.
5:00 Scott Galloway? It feels like animal spirits are coming back into the markets. Your thoughts?
5:04 Aswath Damodaran? There's some of that and some of the recognition that these big tech companies have incredible amounts of buffer. That's what we realized last year, that you could lay off 10,000 employees without a dent to your revenues, that they built up a lot of fat on the way up. And essentially, when they cut costs, that cost cutting is almost costless from a revenue perspective. So I think that these tech companies had an incredible amount of fat to burn off. And as they've burnt it off, markets have recognized, they still stay profitable, they still deliver the margins they used to. And a lot fewer people employed at them, but I think that that's a recognition you're seeing rewarded this year.
5:43 Scott Galloway? When you're on the show or when you're on the pod, we talk a lot about the same names, Apple, Meta, some of the bigger players. Give us your thoughts around valuation and the company Nvidia.
5:55 Aswath Damodaran? I think Nvidia has been a stock that I've had in my portfolio now for five years. And when you talk about the online and the social media revolution, somebody's got to provide the infrastructure to make it run. In the 1990s, the peak of the dot com boom, people forget that the company that reached the highest market cap was Cisco, a company that had nothing to do with the online retail and other space, but the infrastructure for online. Nvidia, in many ways, has powered the tech growth for this year by providing the infrastructure, the hardware, to make it happen. And I describe it as my opportunistic chip company. While the rest of the chip makers were kind of looking at a market that had slowed down in terms of growth,
6:39 Aswath Damodaran? Nvidia always seemed to be in the right place at the right time for new markets, whether that was gaming or whether it was crypto and now with AI. The first time around, you can say they were lucky, but by the time you get to the third time around, this is by design. I mean, this is a company that's been opportunistic in going after markets that are just taking off and are taking, you know, have been able to benefit from those markets. So that's why I bought Nvidia in 2018 because of their opportunistic streak in the company. And at the time, the price had also been knocked down. This is again something that people forget with these highly priced companies. They act like these companies would never been touchable as investments. But the reality is, you look at the history of Nvidia,
7:23 Aswath Damodaran? it's had two near-death experiences in the last 20 years, dropping 80% in market cap twice. And in 2018, they lost 40% of their market cap. So even these companies will look and say, I would never have been able to buy that stock. There was a time in the last 15 years where to been able to buy the stock. And I think that's a lesson that value, if you're a value investor, you need to take away is you cannot just stake these stocks off the list of companies you're interested in investing in. Because at the right price, they are great investments. I know I got lucky in Nvidia because I had no idea AI was coming. But I bought the fact that they would find a way to be in that next big market when it came along.
8:04 Ed Elson? Hi, Aswath. Thanks for joining us. I also have a question. I read your recent blog, your blog, Musings on Markets, and you wrote about AIs winners and losers, and you wrote about Nvidia. And the conclusion that you reached at the end of the blog was that Even if you assume this very highly bullish stance on the AI market as a whole, as well as assuming that Nvidia will continue to maintain relative dominance in the market, in the AI chip market. If you assume all of that, you still believe that that current $420 price point is still too high. Could you take us through your thesis there and how you concluded that?
8:44 Aswath Damodaran? In a sense, it's a series of estimates, right? So you know, you you take AI right now, it's a $25 billion. If you're lucky, chip market is about 25 billion. I look for estimates of how big that market could be 10 years up. The biggest number I found was 350 billion. I gave Nvidia 100% market share of that market, every single chip sold, and I still couldn't get up to $400 per share. So you almost have to price in another market out there as big as the AI market that we haven't seen yet, that Nvidia is going to be able to jump into. Could that happen? Given the history over the last decade, I wouldn't rule it out. But if you price that in as an expectation, where's your upside?
9:27 Aswath Damodaran? You know, it's one thing to buy Nvidia at 150 and say, I'll get the optionality of jumping into that market. It's another thing to pay $400 per share, price in the expectation that there'd be another $350 billion market we haven't even seen yet that they will dominate, and put that into your market cap. And that seems like an incredibly large risk to take if you're an investor jumping in for the first time.
9:50 Ed Elson? Didn't you just describe Tesla?
9:52 Aswath Damodaran? Now, I valued Tesla earlier this year and I came up, this was right after their travails. And this again goes to my point about these companies go up and down. There will be points at which Tesla was trading at about $95 per share, $90 per share at their low point. I valued them pretty close, the low point, and I concluded that it was close to fairly valued, perhaps some upside. Now, of course, it's trading at two times that upside. It doesn't surprise me in the least. Tesla is always a company that you overshoot or you undershoot. So you know what, I'll hold my fire on Tesla. I wouldn't be surprised if a year from now Tesla is back to trading at ninety five dollars per share. This is a company that essentially is the equivalent of a manic depressive.
10:37 Aswath Damodaran? You know, you you get everybody in a mood where everybody is buying. Or you just get everybody turned down in the stock. But you're right, Tesla is one of those companies where the narrative seems endless when the good times. And it seems to have no place to go in the bad times. And right now, the narrative seems endless. Everybody is piling on. There's an upbeat story about what Tesla is going to pull off, but you are pricing in. Not just an expectation that they will dominate the electric car market, but that they will find other markets to take advantage of. And what makes it so difficult to push back is these are plausible stories. It could happen. But investing on the expectation of it could happen seems not to me a great way of investing.
11:20 Aswath Damodaran? Because you're just, you know, your best case scenario is you get your expectations delivered. Your worst case scenario is the company is as exceptional, not awesome, as you built in.
11:31 Ed Elson? Yeah, what are the prospects for Nvidia? I mean, how could Nvidia scale? One of the things that Scott and I have talked about is how Nvidia is not vertically integrated. And that is, it designs its chips, but it doesn't build them. It outsources the manufacturing to TSMC. Do you think that Nvidia will need to vertically integrate at some point? Is that the solution to scale? Like, what is the the thing that Nvidia could do that isn't, you know, a hundred percent market share of the AI chip market?
12:01 Aswath Damodaran? I don't think vertical integration is going to do it for them. Because that's a lower margin commoditized business. And there's a reason they've outsourced it to TSMC. Which raises an interesting country risk question that I don't even want to go into now. Because they are entirely dependent on Taiwan Subconductors delivering their chips. I think what they need, I mean, let's face it, five years ago, if you talked about the AI market, you said, well, it's not a big market, I don't care. Five years later, people talk about a three hundred billion dollar market. Who knows what the next technological shift will be and what architecture we will need? So for it to scale up, you actually need a market we don't even know about yet. Like the crypto market, the gaming market and the AI market.
12:44 Aswath Damodaran? And that's why I said it's conceivable it could happen because it's happened three times in the last fifteen years. Markets that came out of nowhere that were big markets that Nvidia happened to dominate. But you'd actually need something like that. I mean, there's talk that, and I'm not as upbeat about this, about the Omniverse. In fact, Nvidia's CEO talked about the Omniverse, Metaverse, virtual reality, the kinds of chips you need. It's not a three hundred billion dollar market. That's not big enough. So you need a market as big as what the AI market is seen to be. And Nvidia to dominate that market for you to be able to get to four hundred dollars per share.
13:23 Ed Elson? Well, I was just gonna ask, you bought Nvidia in twenty eighteen. Your thesis sounds like it's probably a little overvalued at this point, or at least it's primarily driven by narrative. What is your recommendation to existing Nvidia shareholders?
13:40 Aswath Damodaran? I don't advise other people on what to do because they've got to factor in what they think about Nvidia. I can tell you what I did. I sold half my holding of Nvidia because I think it's overvalued. And I, you know, I've made back well over, I mean, seven times what I originally invested in Nvidia collectively. I've held on to the other half because I think the momentum in this case is going to mean that the price is not going to collapse twenty five or forty percent. But it's on watch. Which means that if I truly feel that, you know, that if there's any more of a run-up, that half is also ready to leave my portfolio. But I think this, you know, there's an interesting question about whether we treat investments
14:24 Aswath Damodaran? that are already in our portfolio differently than investments we plan to make for the first time. It's, I think, something that from a psychological perspective and an investment perspective is worth examining. You saw that at the Berkshire Hathaway meetings, where somebody asked, I think Charlie Munger, whether he felt comfortable that, I think, about a third of Berkshire Hathaway's portfolio is in Apple. And he said, I'm completely comfortable. I'd wager if you asked him a question, would you feel comfortable taking a third of Berkshire Hathaway's money today and investing in one stock? He would say no. And I think that I'm not saying he's being irrational, but I think it's something where we treat investments that are already in our portfolio differently than investments we planned to make for the first time.
15:07 Aswath Damodaran? And I was the first one to admit that I was being, you know, internally inconsistent by holding on to half my portfolio. But I think that this way, I think regret is one of those things you worry about as an investor. This way, I get to have my cake and eat it too. If the stock drops, I can say, look, I sold half my stock. If the stock goes up, I can say, look, I held on to half. I know that sounds like something that rational people should not do, but we're human beings. Rationality is the first casualty when it comes to investing, and this happened to be one of those cases. I'm open about the fact that I'm being inconsistent.
15:45 Scott Galloway? We'll be right back.
15:54 Scott Galloway? Support for the show comes from Nutraful, the number one dermatologist recommended hair growth supplement brand used by over one and a half million people. With age comes knowledge, patience, and for some, hair loss. Didn't say it was all good things. And for those who want to do something about it, there's Nutraful. Nutraful has formulas built for men at different life stages. They have Nutraful Men for Guys Age 18 to 49, plus the new Nutraful Men 50 and Older. That's the first product of its kind specifically for men over 50. You can now address the key root causes of thinning wherever you are in life. Grow visibly thicker, fuller hair in just three to six months. Start Nutraful today and make the hat optional. Visit nutraful.com and enter promo code PROP G for $10 off your first month's subscription
16:38 Scott Galloway? and free shipping. Find out why Nutraful is the best selling hair growth supplement brand at nutraful.com, spelled N-U-T-R-A-F-O-L dot com, promo code PROP G. That's nutraful.com promo code PROP G.
16:58 Scott Galloway? Support for the show comes from Upwork. Trying to scale your business? At some point, you're probably going to hit a point where you need some help. Sometimes, the best way to break through that is bringing in the right talent at the right time. Upwork can help. Upwork is a one-stop platform where you can find, hire, and pay expert freelancers across more than 125 categories. Whether you need specialized skills for a single project or extra support to keep up with demand, it's easy to connect with experienced professionals, review their work, and find the right fit. You can move faster without taking on the commitment of full-time hires. And for businesses that need the very best talent, Upwork Business Plus provides access to the top 1% of freelancers on the platform. AI-powered matching connects you with qualified candidates in under six hours, cutting down the time spent searching.
17:41 Scott Galloway? Upwork also takes care of contracts, payments, and other administrative tasks, so you can spend less time managing logistics and more time focused on what's next. Visit upwork.com/profg right now and post your job for free. That's upwork.com/profg to connect with top talent ready to help your business grow. That's U.P.W.O.R.K. com/profg. Upwork.com/profg.
18:13 Scott Galloway? Let's stick with AI. You wrote that you believe that AI will be negative sum. What did you mean by that?
18:19 Aswath Damodaran? Well, I think that when people talk about AI, they talk about how it'll cut costs for companies. They can replace people with AI and that by cutting costs, they're going to make more money. And I was saying that people are tired of listening to me say, which is if everybody has it, nobody has it. So if everybody has AI and they all cut costs, the problem is, somebody's also going to cut prices. And once they start cutting prices, everybody ends up with lower costs and lower prices. Your margins actually decrease because competition takes the upside away. And it's with the experience that you can look at this history, right? When PCs first came out in the 1980s, we were told about how companies would get more profitable because you could now use PCs to reduce the number of people working
19:05 Aswath Damodaran? At your company and that reduced costs will turn out as higher profits. Turned out not to be true. Everybody had PCs. Everybody spent more on PCs. Companies didn't come out as more profitable and each big change. What were promised is this will cut costs, increase profits, everybody will be better off. It is, I think the beneficiaries here might be the consumers. The people who use consultants might find themselves paying less for consultants. If it's automated, if AI can take over that space. But I don't think that consulting companies are going to walk away as more profitable. There are going to be a subset of companies that benefit from this growth. Just like in the PC business, the dot com business, the social media business.
19:47 Aswath Damodaran? So I'm sure there will be companies like Nvidia that can benefit from the growth of AI. But most of the rest of us. I think will find that AI doesn't deliver the promised profits that are being offered out there right now. Because it's not a competitive advantage. Everybody will have access to it and I'm not sure that means that anybody walks away with an advantage from this space.
20:08 Scott Galloway? When you think about the big five, when you think about Apple, Microsoft, Tesla. Who else do we have in there? Meta. And throw in Netflix. Do you see value anywhere? Do you think, I mean, it feels as if a small number of stocks have really driven. A lot of the indices returns to a certain extent, I would argue the indices are. Are not helpful because they give sort of a false impression of what's actually taking place in the market. But when you look at the big guys that we all follow. Do you see value anywhere or do they all seem fairly fully valued?
20:40 Aswath Damodaran? At this point, I wouldn't buy any of them. I'm lucky enough to own four of the five stocks you named other than Netflix. But I think, and Tesla, but I think that at today's prices, I would go out and buy them. But having them in my portfolio already. I'm not sure I'd sell them either, which is a strange thing to say, saying if you wouldn't buy them at today's prices. Why wouldn't you sell them at today's prices? I have two words, California and taxes. Which kind of hold me back. And I think that from that perspective, I think that they are in fact fully priced right now. But I think there will be chances of those people who regret not buying them. There will be a chance again in the future. I can almost guarantee it. Because the nature of these stocks is they will go up and they will go down.
21:24 Aswath Damodaran? And there will be times at which there will be decent investments again. But right now, I think that they're as fully priced as you can get.
21:31 Scott Galloway? And when you look across different geographies and different sectors, do you see any sectors or geographies or specific names where you think this is a good entry point?
21:41 Aswath Damodaran? I was actually doing the table on the breakdown of how 2023 has played hard across sectors. And it turns out that technology accounts for a big chunk of the increase in value. And 90% of the increase in technology comes from the very top decile of technology companies, the largest tech companies. So if you look at how much market cap the rest of the market has gained in 2023, it's not that much. So many of these companies that got knocked down in 2022 have not really recovered most of that drop in value. So I would say, look at the left behind companies, the sectors that have, and I think seven of the 12 S and P 500 sectors or the S and P sectors
22:24 Aswath Damodaran? actually have either are either flat this year or down this year in spite of the market going up. I am, I mean, I would look carefully at those sectors and the companies in those sectors because I think those sectors got marked down in 2022. They haven't come back. And if we truly escape the potential recession that people keep talking about never seems to arrive, many of those companies I think are now undervalued, a potential add on to your portfolio. So I would say, look at the, look at the companies that have not benefited from the run up. If you think about an entry point into the market, because I think that's where you're going to see the next leg up in this market.
23:04 Scott Galloway? One of those companies that hasn't experienced an updraft, and I don't know if you've looked at it. Have you spent any time looking at Snap, Aswath?
23:10 Aswath Damodaran? I have off and on since their IPO. And, you know, it's a space I'm reluctant to enter because online advertising has become this strange cramped space where it's, you know, it's become a zero sum game.
23:24 Scott Galloway? Mm hmm.
23:25 Aswath Damodaran? So I think Snap has done reasonably well in, in holding their own. But I, you know, I am reluctant to go into that space because I think anytime you have a zero sum game, you're going to have, you know, you can see this with Facebook entering Twitter space right now. And I, but I think Snap's done a pretty good job. Evan Spiegel's got to be given credit for finding a way to kind of hang in there, finding a niche, which is what he should have gone for in the first place. I think that was a mistake he made at the time of the IPOs to think that he was going to be the next Facebook. And I think he's rediscovered that being a niche company in a large market is not a bad space to be.
24:03 Scott Galloway? So a high flyer that's sort of near to my heart, because I think it plays an important role in society. And it's one of those companies that's declined dramatically, two brands, Charles Schwab and Moderna. Any thoughts on either of those companies? One, they're both down about 30% year to date.
24:18 Aswath Damodaran? Schwab, I think the consequences, the banking fiasco was that people started worrying about Schwab as one of the names that was actually thrown around as a bank that might get into trouble. So I think it's still recovering. I don't think it's in danger. In fact, I did buy Schwab because of that reason. I looked at the banks and said, you know what? I think Schwab was thrown into this mix for the wrong reasons. It's not the kind of bank that I would throw in with First Republic or with Silicon Valley Bank in terms of not having sticky deposits. You know, so I think Schwab is a good investment from that perspective because I think it's a solid franchise. It's a franchise that I don't think is going to go away. Moderna, I think it's the COVID letdown. I think that to the extent that Moderna's
25:03 Aswath Damodaran? price got pushed up because of COVID, to the extent that COVID has retreated from the headlines, companies that benefited from the COVID upsurge, you know, Pfizer, Moderna are seeing a letdown. The question of whether the letdown is too much depends on how mRNA translates to other. If it's just a vaccine, then I think the letdown is legitimate. But if I think this is the basis for new medications that could come out in the future, I think this might be a good time to take a look at Moderna and saying they have, you know, an entry point into new medications that could be used to generate new drugs, new revenues in the future. But I think at least there are good reasons why you saw the drop
25:46 Aswath Damodaran? down, but that doesn't mean they can't be good investments for people who are willing to take the long, have long time horizons.
25:53 Scott Galloway? Stay with us.
26:06 Scott Galloway? Support for the show comes from Vanta. As AI adoption grows, so does your company's security risks and requirements. New frameworks, audits, and vendors keep piling on, but your team isn't getting any bigger. Most compliance tools promise automation, but you're really stuck doing all the work by hand, chasing screenshots, validating controls, and playing catch-up when audit season comes around again. Vanta works differently. The regentic trust platform is built to scale with you, not slow you down. With over 1,400 automated tests across 400-plus integrations, Vanta collects evidence and monitors your controls year-round, cutting your audit prep by 82%. Plus, you can access the Vanta agent everywhere you work, whether your team is in Vanta every day or living in tools including Claude or Cursor. Want proof?
26:51 Scott Galloway? Over 16,000 fast-growing companies like Ramp, Ryder, and Harvey save time and resources while scaling fast with Vanta. Learn more at vanta.com/profg and get $1,000 off. That's spelled V-A-N-T-A dot com slash prof G for $1,000 off.
27:13 Speaker 04 Your heart can tell you a lot about your health. Apple Watch Series 12 measures your heart rate every five seconds with the most accurate heart rate sensing in wearable. So your vitals app, now with heart rate variability, can tell you when something is off. And your readiness score can let you know when to rest and when to push. Hear the story in every heartbeat with Apple Watch Series 12. The features described are for wellness purposes only and not for medical use. iPhone 11 or later required. Based on Apple conducted study of heart rate accuracy, August 2026. Visit apple.com slash Apple Watch Series 12.
27:48 Scott Galloway? So as what, there's been this unprecedented increase in interest rates. Does it change?
27:55 Scott Galloway? I mean, obviously, valuation, interest rates play a big role in how you come to what you think is the right number in terms of valuation. But in terms of your actual portfolio theory, and I'm looking at credit for the first time. I've never owned a bond. And I'm actually thinking, well, at my age and my situation and the fact that I get paid five or five and a half percent to hold cash versus 30 bips 18 months ago, that maybe I should be thinking about fixed income. What are your thoughts about general portfolio theory?
28:23 Aswath Damodaran? I'll tell you from a personal and a market wide standpoint. From a personal standpoint, until two years ago, when I had money in my brokerage account, I just let it sit in cash. It just wasn't worth the effort of trying to put in T bills and make 0.03% a year. For the last two years, I've actually gone to the T bill auction, taken every dollar of cash that I can take out, put into T bills, because when you can make 5.3%, that's cash you're leaving on the table by not investing. The penalty of holding on to cash as cash has suddenly shown up again for the first time in perhaps what 10 or 12 years. But from a market wide perspective, I think this is healthy.
29:06 Aswath Damodaran? I mean, I think of markets as this contest between safety capital and risk capital. Safety capital is capital that goes in the safest parts of markets. Whether it's in the corporate bond market, you go into AAA rated bonds, in the stock market, money making, stable companies. Risk capital is what goes in the riskiest parts of every market. And for a decade, we've tilted the scales in favor of risk capital. Because if you're a safety capital investor, you made nothing on cash. You made low returns on safe investments. You push money to risk capital. And in my view, risk capital has been too easy for people to access. Too many businesses have been started and funded because risk capital was so free and easy for everybody to get.
29:52 Aswath Damodaran? And I think as an economy and as a society, we are going to Pay the price for having risk capital being so accessible and so easily available to people because I know disruption has been viewed as this great word, but there's always a dark side to disruption. Existing businesses get changed and sometimes ruined. And that's fine if the new businesses that are coming in are superior in terms of business models. But for a decade, that wasn't the case. We destroyed taxi cabs by bringing in ride sharing, but ride sharing as a business hasn't figured out how to make money. And in business after business, we've allowed disruption to happen with new business models
30:33 Aswath Damodaran? that are not grounded in reality, but funded with immense amounts of risk capital. So in my view, this is healthy, that finally, safety capital has a place to go. And in any healthy market, you need a balance between safety and risk capital. And perhaps we'll find a balance in 2023 between the two.
30:53 Scott Galloway? So typically, when you have a first half year performance like this, it bodes well for the IPO market for the second half. And in Q2, we had secondary offerings, raised triple the amount of money they did in Q2 of last year. Are there any IPOs that you're excited about or any thoughts on the general IPO market in the back half of this year?
31:11 Aswath Damodaran? The interesting thing about 2023 is while markets have come back, risk capital is not IPOs, VC money, investment in high yield bonds, you're not seeing the upsurge you usually see when markets are doing well. Maybe there's going to be a delayed reaction. So maybe the second half is going to be a better period for risk capital than the first half was. So I'm keeping my eye on the IPO market, the venture capital market, the high yield bond market, because that's where you're going to see risk capital come off the sidelines. I'll be honest, though, I don't think risk capital is going to go back to the way it was in the last decade. As I said, that's not a bad thing. I think it's going to be much more finessed and focused than it used to be.
31:54 Aswath Damodaran? So I think if you're going to see IPOs, there are going to be businesses that have at least some kind of business model. At least that's my hope is that you're not going to see the kinds of companies go public that have no business model and essentially just lots of users, lots of subscribers and lots of promise. And hopefully, you're not going to see. You know, the kinds of excesses you saw, especially in 2021, where risk capital was so easily inaccessible that people were essentially taking it and creating things that should not have been created in the first place. You know, developments that are not good for the market in the long term. No, I know the the way we take companies public is probably due for a change. I know Bill Gurley has talked about direct listings.
32:36 Aswath Damodaran? But I think that the change is going to be something that that's going to take time. It's it's going to take a while for us to walk away from a century of how we've gone public.
32:47 Scott Galloway? And I can't resist asking, but I'm hoping it's one of the last times I ask. But any thoughts on Bitcoin or crypto in general?
32:53 Aswath Damodaran? It's a currency that nobody uses and a collectible that doesn't behave like a collectible. That part of the story hasn't changed. And in fact, what's happened to Bitcoin this year is, I think, the worst advertisement for it to be a collectible. Why? Because it's gone up as stocks have gone up. It goes down when stocks go down. This is not the way a collectible is supposed to behave.
33:14 Scott Galloway? It's not a hedge, right? It was advertised as a hedge.
33:17 Aswath Damodaran? Yeah. And if it's a hedge, it's certainly not behaving like one.
33:20 Scott Galloway? So, Swath, you've seen a lot of market cycles. Just based on your experience, do you have any sort of gut feel for the macro climate? Or where you think the markets are headed over the next six or 12 months?
33:32 Aswath Damodaran? I think much of it, as it was last year, is going to be determined by how inflation continues to behave for the rest of the year. I mean, so far, it's behaved relatively well in terms of what people thought of as a worst case scenario, which is keep going up. So, but I don't think it's going to go back to the 2% or 1.5% or 1% the Fed would like it to see. So it's going to be a combination of inflation staying higher than what the Fed expects it to, but lower than it was last year, and how the Fed reacts to it, that you're going to see effect driving markets for the rest of the year. So I'm afraid you're going to play this game for the rest of the year. Good news is going to be bad news, and bad news is going to be good news, at least for markets.
34:14 Aswath Damodaran? And we're going to, you know, but I think that if nothing else, this year should be in further evidence that experts have no idea what they're talking about. Because you know, at the start of the year, everybody was guaranteeing us a recession. It's almost written in the cards, right? In fact, every market strategist predicting markets would go down. And markets, as is their want, have shown them all wrong. So the more I watch what markets do and the more I listen to experts tell me what's coming, the more inclined I am to trust markets over experts.
34:44 Scott Galloway? Do you have any thoughts on the yield curve inversion, Aswath? I mean, we're talking about incoming recession, people predicting recession. You'd rather trust the markets. Yield curve inversion would be one of those examples of the markets telling us something, but it didn't happen. What are your thoughts?
35:00 Aswath Damodaran? You know what? I've always been a skeptic on the yield curve. I remember three years ago, writing a piece on the yield curve and it's as a predictor of markets. And I basically concluded that was a very, very weak predictor of markets. It's all, you know, it's become this conventional wisdom. The yield curve is inverted, a recession is coming. But I think that's part of the problem in markets is we still hold on to these rules of thumb, even though we have actual data with us. Now, let's play some Moneyball. If we think that having short-term rates be higher than long-term rates is bad for the economy, let's look at all of the data. Let's not use these discrete, you know, rules of thumb of if the yield curve invades, it's almost guaranteed that you're going to have a recession. So I've always been a skeptic and this year's made me even more skeptical about its predictive power.
35:45 Scott Galloway? Aswath Damodaran is the Kirchner Family Chair in Finance, Education and Professor of Finance at NYU Stern School of Business, where he teaches corporate finance and valuation. Aswath joins us from San Diego. Aswath, it's always good to see you. Thanks for your time.
35:59 Aswath Damodaran? Thanks, Scott.
36:02 Scott Galloway? This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our executive producers are Jason Stavers and Catherine Dillon. Mia Slavero is our research lead and Drew Burrows is our technical director. Thank you for listening to Property Markets from the Vox Media Podcast Network. Join us on Wednesday for office hours and we'll be back with a fresh take on markets every Monday.
36:58 Speaker 05 We just moved into our new house and I didn't realize just how close we were to the neighbors. That's when my friend told me about Blinds.com.
37:06 Speaker 06 Blinds.com isn't a medication, but it can improve how you feel about your home. Customers who shop at Blinds.com experience excellent customer service, from consultation to installation. Side effects include increased privacy and better sleep. Talk to your partner today and see if Blinds.com is right for you. Visit Blinds.com to order your free samples.
37:29 Speaker 07 When you shop pickup at Kroger, you can expect the savings you love and fresh groceries selected just for you. Our associates are committed to getting every detail right, carefully handpicking your items, checking for quality and freshness, and packing your order with care. Because bringing you fresh, quality groceries is what we do best. And right now, enjoy $20 off your first online order of $75 or more. Restrictions apply. See site for details. Kroger, fresh for everyone.
Previous No Mercy / No Malice: Grief and Happiness Next Office Hours: TikTok and Political Disinformation, the Insurance Industry and Climate Change, and the Work-Life Balance Conundrum Page updated October 26, 2026 · transcript and summary are machine-generated
