Minimize self-inflicted damage by spreading bets (diversification), acting rarely (low turnover), and staying away from personal weaknesses. 2. The Development Framework
Aswath Damodaran's framework for is not a single set of rules, but a guide to finding a personal approach based on core beliefs about how markets work. Damodaran, often called the "Dean of Valuation," argues that there is no "best" philosophy, only the one that best fits an individual's psychology, risk tolerance, and time horizon. 1. Definition and Core Principles Investment Philosophies By Aswath Damodaran Pdf
Damodaran categorizes approaches based on their view of the "gap" between price and value: Damodaran, often called the "Dean of Valuation," argues
An investment philosophy is a coherent way of thinking about markets and why they make mistakes. It is broader than a strategy (e.g., "buying low PE stocks" is a strategy, not a philosophy). It is broader than a strategy (e
Markets are generally efficient but fail during periods of extreme uncertainty or change.
Damodaran outlines a three-step process for developing a personal philosophy:
Every asset generating cash flow has an intrinsic value that can be estimated.