Valuation can never just be about the numbers

On several occasions I’ve said, “don’t fall in love with numbers,” and “there are no magic numbers.”

Aswath Damodaran has a great lecture on uTube: Laws of Valuation: Revealing the Myths and Misconceptions

At a minute 40 he says, “Valuation can never just be about the numbers.”

At 22:25 he expands on this part of the presentation

but I think it’s worth while to watch the whole thing, less than half an hour.

The Captain


Numbers may not be everything, but they do need to make sense.


1 Like

Numbers aren’t everything and the speaker makes some good points. That being said, every bubble in history has been built around a story that excited the marketplace.



The stories about story stocks are legion.

I am of the opinion that good companies don’t need to be propped up with fantastical stories. Which is not meant to demean the prose associated with a company. But that prose needs to be closer to a documentary than a tall tale.

Your investment horizon also makes a difference. If you are investing for a few days to a few weeks, story can work. If you you are investing for multiple years story is more likely to get you into trouble than the numbers.



Most people have a need to own a story or to disown a story.

Some people take very different looks at stories.