Thanks for the summary, short and informative. Overall good thoughts from Damodaran, especially on excessive disclosure and iflation. I do not completely agree with his view on ROIC as a useless backward-looking metric, given the proven persistence of ROIC for high ROIC companies. His critique of value investors (dummies looking at screeners) also sounds strange - does he really believe those people look exclusively at low multiples without trying to underwrite bull/base/bear cases, weighing risks and potential rewards? Sounds biased on his part.
I believe his view on ROIC is more directed at the novice investors who use it as a be-all and end-all metric without recognizing the need to forecast (at least directionally) what future ROIC will look like. ROIC is useful as a metric but shouldn't be viewed as a panacea to conclude whether a company is a good or bad investment. Same thing with the value investor comment - seems really directed at the old school guys who exclusively use screens as a way to generate and ideas. That's probably a minority of the value investing population (I think).
Thanks for the summary, short and informative. Overall good thoughts from Damodaran, especially on excessive disclosure and iflation. I do not completely agree with his view on ROIC as a useless backward-looking metric, given the proven persistence of ROIC for high ROIC companies. His critique of value investors (dummies looking at screeners) also sounds strange - does he really believe those people look exclusively at low multiples without trying to underwrite bull/base/bear cases, weighing risks and potential rewards? Sounds biased on his part.
But overall, a nice interview!
I believe his view on ROIC is more directed at the novice investors who use it as a be-all and end-all metric without recognizing the need to forecast (at least directionally) what future ROIC will look like. ROIC is useful as a metric but shouldn't be viewed as a panacea to conclude whether a company is a good or bad investment. Same thing with the value investor comment - seems really directed at the old school guys who exclusively use screens as a way to generate and ideas. That's probably a minority of the value investing population (I think).
Yep, that makes sense. Thanks again for summarizing, I look forward to your future posts!
Thank you!