Excess Returns Show Us Your Portfolio: Aswath Damodaran
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Aug 16, 2025 
Aswath Damodaran, Professor of Finance at NYU and the 'Dean of Valuation,' shares his unique investment philosophy. He reveals why he avoids bonds in favor of equity appreciation and discusses the importance of lifecycle diversification. Aswath dives into risk management, position sizing, and when to cut losses or trim winners. He also touches on alternative assets, international exposure, and how personal values shape spending habits, all while balancing the art and science of investing.
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Review Holdings Regularly
- Revisit every holding at least annually and more often for dynamic stories like Tesla.
- If a stock becomes overvalued per your distribution, trim or sell rather than blindly hold forever.
Beating The Market Is Mostly Luck
- Luck dominates investing outcomes and makes high claimed alphas dubious.
- Be realistic: beating the market by ~2% annually is a meaningful active-investing success.
Diversify Across Company Life Cycles
- Balance your portfolio across company life-cycle stages to avoid timing risk by being concentrated in one stage.
- Different market regimes reward different life-cycle segments, so mix young, mature, and declining firms.
