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How I learned the craft of valuation and ended up assisting Prof. Aswath Damodaran

In 2007, I graduated from college without having a clue as to what I wanted to do with my life. So I just followed what others were doing and enrolled in the Chartered Accountancy (CA) program. The Indian CA program is rigorous not just because of its tough exam structure, but also because you have … Continue reading How I learned the craft of valuation and ended up assisting Prof. Aswath Damodaran

Why do investors not get compensated for diversifiable risk?

One of the tenets of modern finance is that risk is seen from the perspective of the marginal investor[1]. In publicly traded firms, it is highly likely that the marginal investor is well diversified[2] and hence concerned about only about market risk[3]. It follows therefore, that all investors must also consider only market risk no … Continue reading Why do investors not get compensated for diversifiable risk?

Why net depreciation from capex for computing reinvestment rate

We recently came across a question on Quora about why Prof. Damodaran subtracts “depreciation from capex when computing the reinvestment rate of a business.” It further goes on to state the following: "In his book, [Prof. Damodaran] seems to argue that depreciation is a cash inflow that pays for a part of capex, but I don't … Continue reading Why net depreciation from capex for computing reinvestment rate

Demonetization Blues: Mutual Fund Performance during the latest Correction

What had been a fairly decent year for the equity markets till September 2016 was marred by demonetization in the last two months of the year. The markets gave up most of the gains and ended up marginally positive for the year. Nifty 500 (the index which we feel represents the broader Indian market) reached … Continue reading Demonetization Blues: Mutual Fund Performance during the latest Correction