Valuation Guru Aswath Damodaran Skeptical of Bitcoin and Touts Tech Sector’s Historic Rally
In a recent podcast with NYU Professor Scott Galloway, Aswath Damodaran, a renowned valuation expert and Professor at Stern School of Business at New York University, shared his insights on the cryptocurrency market and the historic rally in the tech sector.
Skepticism towards Bitcoin
Damodaran expressed skepticism regarding the adoption and behavior of cryptocurrencies, particularly Bitcoin. He remarked, “Bitcoin is the currency that nobody uses and a collectible that doesn’t behave like a collectible.” He highlighted the volatility and inconsistency in Bitcoin’s behavior, noting its deviation from traditional investment principles. He also questioned its role as a hedge, stating, “It’s gone up as stocks have gone up, it goes down when stocks go down. This is not the way a collectible is supposed to behave.”
Tech sector’s historic rally
In the conversation, Damodaran also provided his perspective on the tech sector’s historic rally in the first half of the year. He noted that the rebound was driven by a concentration of larger tech companies that are profitable, distinguishing it from the risk capital influx observed in previous years. He emphasized the importance of recognizing the companies’ profitability and stability.
“It looks like a tech comeback, but it’s a very different comeback than the drawdown we saw last year. It feels like animal spirits are coming back into the markets. There’s some of that and some of the recognition that these big tech companies have incredible amounts of buffer, that’s what we realized last year that you could lay off 10,000 employees without a dent to your revenues,” Damodaran elaborated.
He further explained, “They built up a lot of fat on the way up. I think that these tech companies have had an incredible amount of fat to burn off and as they’ve burnt it off, the markets have recognized they still stay profitable and deliver the margins they used to with a lot fewer people employed.”
The valuation guru’s insights shed light on the dynamics of the cryptocurrency market and the historic tech sector rally, providing a valuable perspective for investors and market observers.
In conclusion, Damodaran’s skepticism of Bitcoin and his analysis of the tech sector’s historic rally provide a nuanced understanding of the current market landscape and the factors driving investor sentiment.
I have been a full-time professional writer for over 10 years, and have written for some of the biggest publications in the world. My work revolves around cryptocurrencies and blockchain technology, and I am widely considered to be one of the leading experts in these fields.I have written two books on the subject matter, and my articles have been featured in major news outlets such as The Wall Street Journal, Forbes, and Huffington Post. In addition to writing, I also give talks and seminars on cryptocurrency investing, and am a regular commentator on CNBC, Bloomberg, and other financial news networks.
