tag:blogger.com,1999:blog-8152901575140311047.post8244009941248960626..comments2024-03-29T07:41:47.433-04:00Comments on Musings on Markets: A Viral Market Meltdown IV: Investing for a post-virus EconomyAswath Damodaranhttp://www.blogger.com/profile/12021594649672906878noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-8152901575140311047.post-35558298454230695672020-03-29T21:17:10.079-04:002020-03-29T21:17:10.079-04:00Thanks Prof Damodaran. I have learnt a TON from yo...Thanks Prof Damodaran. I have learnt a TON from your posts. Regarding this point on the Distressed Equity investment strategy:<br /><br />"Large enough to be targeted for government bailouts, which are a mixed blessing, since they allow companies to survive, while wiping out or severely constraining equity claims."<br /><br />Why would equity claims be wiped out if I am holding their stock? Is it because the government (& other debtholders) would need to be paid out first so dividends would be constrained? With this strategy, you could still benefit from capital appreciation though?<br /><br /><br />Ashnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-57654674486598907642020-03-29T17:39:22.683-04:002020-03-29T17:39:22.683-04:00Professor,
Thank you for yet another informative ...Professor,<br /><br />Thank you for yet another informative blog post.<br /><br />When it comes to investing for that profile of people who are not full-time investment professionals but are also not completely clueless - suppose they took finance/security classes in school or worked earlier in their careers in investment banking where they had to do valuations and fundamental analysis, what investing approach do you recommend in terms of choosing between ETFs vs individual stock selection? I'm one of those people. I track 13-Fs to see what classic value investors or successful hedge funds have bought and sold, subscribe and read a couple investment newsletters monthly that contain stock pitches, check sources like SumZero for stock ideas, etc, but I don't have the time to do deep dive analyses and valuations of a stock myself. I do enjoy buying shares in individual companies more than just a basket of ETFs. <br /><br />Is it still recommended to just go with ETFs and a basic asset allocation, or could you get away with triangulating some good stock ideas from the various sources one reads/tracks?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-34404402675144395862020-03-29T17:35:55.895-04:002020-03-29T17:35:55.895-04:00Hello Professor:
Very much enjoyed your presentat...Hello Professor:<br /><br />Very much enjoyed your presentation.<br /><br />You set the long term perpetual growth rate using the 10YR treasury. Currently it is not only at historic lows but the TIPS Spread is negative. This implies to me that these assets are mispriced. Using a mispriced security in such a key valuation position seems risky businesses. I want you to be right as it undervalues the S&P. Can you please comment? <br /><br />Ian QuigleyAnonymoushttps://www.blogger.com/profile/16993785027639214564noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-5591983445993987732020-03-25T18:37:37.430-04:002020-03-25T18:37:37.430-04:00Nvda showed up in one of your screens. I know you...Nvda showed up in one of your screens. I know you previously stated you bought it at $145. Will you show how you valued it at that time? ThanksAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-31028658146716508072020-03-25T11:12:44.685-04:002020-03-25T11:12:44.685-04:00Hi. You mentioned Zoom (ZM) in recent posts and i...Hi. You mentioned Zoom (ZM) in recent posts and instead, you should take a look at CSCO. Because Cisco’s Webex platform is much bigger than Zoom’s and I don’t think the market is on to the implications yet. Zoom is being priced (not valued :) at more than $40 billion. If Cisco spun off Webex, or even created a tracking stock, there is tremendous opportunity to unlock value for Cisco and its shareholders.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-11615840452870973902020-03-25T01:16:50.267-04:002020-03-25T01:16:50.267-04:00Are you suggesting using relative pricing as oppos...Are you suggesting using relative pricing as opposed to DCFs valuation?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-52668490313944750622020-03-24T05:04:24.282-04:002020-03-24T05:04:24.282-04:00Thanks. Great read.
If you look at investing as i...Thanks. Great read.<br /><br />If you look at investing as identifying market opportunities - than panic can be a lead driver for an opportunity. <br /><br />In that regard - what about a strategy that <b>aims for companies that were impacted by panic the most</b>, such as airliners and cruise companies (but not only)? Seems similar to what you described as Distressed Equity, but not quite, since the trigger is different. You need a distressed equity AND panic for the actual product.<br /><br />Panic makes sense in the short term. Everything looks terrible. Looks like we have to run. Than we run. Who would go on these ships while there's no vaccine? probably no one, and indeed they are temporarily shutting down. On the flip side - panic never last, since panic is not just a run, it's actually a sprint. So I wouldn't mind going on a cruise in 2021, knowing that all of the passengers were vaccinated, with the extra benefit of a probable cost reduction + all the safety measures management can come up with.<br /><br />To move forward with such an investment you need to assume:<br />1. That there will be a CV vaccine available during 2021<br />2. Lenders will be willing to provide enough funds to sustain the invested company during these rough times<br /><br />The main risks you're taking:<br />1. The company may die in the meantime due to high debt to EBITDA ratio<br />2. Valuation growth rate of these companies will be outpaced by other strategiesEyal Gorenhttps://www.blogger.com/profile/01015779866504972644noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-65861743076761094822020-03-23T18:44:40.254-04:002020-03-23T18:44:40.254-04:00Good evening Professor,
When you build spreadshee...Good evening Professor,<br /><br />When you build spreadsheets incorporating data from "all publicly-traded stocks," do you have a specific data source that works well for you? Any recommendations for vendors/resources to be able to pull in basic market/fundamental metrics across the entire stock market (rather than for single companies)?<br /><br />Thanks in advance for any guidance!Anonymousnoreply@blogger.com