At a time when concerns about the economy and the risks of investment in such a climate abound, Aswath Damodaran, professor of corporate finance and valuation at Stern School of Business at New York University, assured an audience in Chennai that the payoff was greatest where there is the most uncertainty.
At his talk on Friday, Prof. Damodaran spoke about ‘Living with noise: investing in the face of uncertainty’. As a weather forecaster, would you predict the weather of Honululu, which is quite predictable or North Dakota which is unpredictable, Mr. Damodaran asked.
“Go into the eye of the storm because that is where the payoff is the greatest,” he said.
Through his talk, he broadly dwelt on valuing companies in the face of uncertainty, classic responses to uncertainty and risk management systems. “Uncertainty is a feature, not a bug,” he said.
The Chinese symbol for crisis, he said, best explained risk. Each of the symbols stood for danger and opportunity, he said. While asking the audience about how comfortable they were with risk, he spoke about different ways to measure aversion to risk.
Prof. Damodaran went on to talk about the easy availability of data, and the four fundamental questions that are integral to the process of valuation.
Chandra Thanikachalam, general secretary, Indian Council for Child Welfare-TN, said that the fundraiser lecture was organised to commemorate the completion of 60 years of the ICCW-TN.