Wednesday, September 7, 2011

Class is in session...

As some of you probably already know, I teach at the Stern School of Business at NYU. Well, summer is officially over and a new semester is beginning. In a rite that I repeat at the start of every semester that I teach, I want to invite you to be part of my class this semester. Note, though, that this invitation is completely unofficial and approaching NYU for credit for taking the class is a definite no no.

This semester's class:Valuation
The only class that I will be teaching this fall is Valuation. A little history, though it may bore you, is in order here. I came to NYU in 1986 and the very first class that I was asked to teach was a Security Analysis course, a class with deep and venerable roots (Ben Graham taught this class at Columbia and Warren Buffett took it in the 1950s). It was a class on valuing securities of all types, bonds, futures, options and stocks, but it had outlived its useful life by the mid 1980s, partly because there were other electives that focused on bonds and derivatives and partly because there was no narrative left that fit the class. I hijacked the class, revamped its content (without renaming it), and made it a semester-long class on valuing businesses: small and large, public and privately owned, growth and mature and developed and emerging markets. About 4 years ago, the administration recognized the obvious and changed the name of the class to reflect its content.

What is this class about?
While the class is centered around intrinsic valuation (or discounted cash flow valuation, if you prefer to use its applied form), and I am a firm believer that intrinsic value matters, I try (though I do not always succeed) to keep an open mind and not force feed my views. Consequently, you will hear me talk a lot about the limitations of discounted cash flow valuation and what I see as its dark side. In addition, a significant portion of the class is devoted to multiples and comparables (what I term relative valuation), since it is the dominant approach used by analysts to value companies. I do also bring in the role that option pricing has played in valuation, in the form of real options. Thus, I try to make this class as broad as possible in terms of approaches covered and businesses valued.. My objective is that you should be able to value any asset or business, using any approach, and from any perspective (investor, acquirer, appraiser), by the end of this class.

What background do I need to take the class?
This class is an elective that is taken primarily by second year MBAs, most of whom have had the misfortune to take a full semester class in Corporate Finance from me in the previous year. However, I do make the assumption that a summer is all you need to wipe out everything you have learned over the previous year and the first three or four weeks of this class provide a quick review of the corporate finance class.
I do assume that you have some working knowledge of accounting, present value and statistics. If you do not, I would recommend quick primers that I have online that may be useful to you:
But even if you don't have time to do these things, why not just drop by and listen to a lecture or two?

How do I take this class?
a. The first thing to do is to visit the website for the class:
This is the central repository for everything to do with the class.
b. The second is to download the lecture notes for the class and watch the webcasts for the class. Both are available on this page:
You have two choices with the lecture notes. You can print them off on paper and use them in conjunction with the webcasts. Alternatively, you can download them as pdf files and read them on your iPad or Kindle (if you have one). On the webcasts, you have three choices:

  1. Streaming video (The file will be streamed to your computer. This will work only if you have a good internet connection, but should be of the best quality)
  2. Video podcast (The .m4v file will be downloaded to your computer and you can watch the video using Quicktime or video software or on your iPad or Smartphone)
  3. Audio podcast (The .mp3 file will be downloaded as an audio file and can be played on any audio player)
c. If you really want to feel involved in this class, you can go further:

  • Take quizzes/exam: I will post the quizzes on the website, right after I give it in class and the solutions the day after (with grading guidelines). You can take the quizzes/exam and grade yourself (follow the honor code).
  • Valuation project: This class has a big project that is a valuation of a company. You can pick any company and follow along on the project. On this one, unfortunately, I cannot be a full service operation. While I do give feedback to those who are officially in the class, I cannot do the same with everyone who is taking the class unofficially. If you do get stuck on a concept, and I can help, I will try.

One final resource that you may want to use. I am trying out a new device put together by a few very smart, enterprising young people called coursekit. It essentially pulls together everything that is on the website for the class and adds a social media component (think Facebook embedded in the course page). I like the look and you can see it by going to:
Enter the code FHGN2P and you will become part of the course online. I will put the emails that I send on here and it will let you raise questions/issues related to valuation that can be discussed. 

In closing, I hope you do drop by and become part of this experience.... See you in class!


Jordi Vilanova said...

This is awesome! Thank you Prof. Damodaran. I'm an MBA but I missed valuation, I will take it online.

Krishnan said...

Prof Aswath

Some have academic knowledge and lack practical aspects, you combine both, and are gracious enough to share it with others.

This is truly a great gesture, look forward to the session


eggshellsandfury said...

Prof. Aswath, just wanted to send my regards and thanks for offering the course. I am sure I will follow your progress diligently.

Zumit Zingh said...

Dear Aswath,

Thanks for the fantastic format on coursekit. Sitting in India, I'm sure, I can take the full advantage of your lectures.


Roshama said...

I just wanted to say I listened to all of the lectures from last semester and I learned a great deal. The Little book on valuation is a great companion piece to have.

Rasna Saini said...

Brilliant - have been looking forward to the class for this year and some valuable discussions on the impact of macro changes.
(Have been your unofficial student for long now)

Ido said...

This is a great opportunity! I've took this course once during my MBA days - but I'll take it again (with pleasure) this time...
Thank you!!

Sri said...

Prof Aswath.

You are the Best !!!. I thank you for the support, knowledge and Service that you extend.


yellowbear said...

Professor, I am an investment professional in Asia. I like to commend you on what you are doing. Its really very good of you. Thank you for doing what you do.

John Allen said...

thank you so much, I can't wait to follow along.

V4Value said...

Very generous of you! Thanks, I will delve in once my accounting studies are over with...

yokkoo said...

Thx u so much, Prof. Aswath. Best regard to you.

Chitrank said...

Thanks a lot professor!! Amazing help for the CFA Research Challenge :)

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