Valuation: Random Musings on Mean Reversion and Capitalizing R&D

So the way the Valuation course works is that all materials are available online – lecture videos and slides – and it’s an entirely self-driven process. Every couple weeks, however, we are able to get an hour of one-on-one with Professor Damodaran and ask him any questions that might be on our minds regarding the course. This week, there were 2 interesting points that caught my attention: the notion of mean reversion in the markets and why you should capitalize R&D expenses.

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Valuation: An Introduction to Valuation

I told you guys last month that I signed up and paid money like a sucker to do a semester long Valuation course through NYU with Aswath Damodaran. Why a sucker? Because Damodaran provides all of this courses and materials through his website for anyone to take for free. Honestly, follow the link and you can take any course he teaches entirely for free. It’s an incredible resource. However, like most people, I never got around to doing the Valuation course available for free because… it’s free. When things are free, they tend to constantly get shifted down in the priority list of things to do because you reason that you can do it anytime because… it’s free. That’s a recipe for never doing anything. So I paid up to motivate myself to actually go through with learning this material. Since my first quiz is coming up, I figured I would do a brain dump of the topics covered so far for my own review. If you find it interesting, great.

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Mental Model: The Precarity of Reputation

For many of you, this quote is nothing new. You may even be rolling your eyes at the image and quote above. Yes, you have probably heard this more times than your mother telling you she loves you. I still want to reinforce the message with a few examples that creatively unpack that sentence to make it really vivid. What drives you to lose a reputation you built up over decades in under a few minutes (sometimes seconds)? It has a lot to do with the Amygdala Hijack. We will look at examples involving a headbutt, some cannibalism, and illegal injections as our case studies.

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You Had $2.5 Million and You Did WHAT!?

I saw this on reddit and had to post this here in case it ever gets deleted by the reddit user in shame. This man got $2.5 million in inheritance a few years ago and he has literally burned it all through day trading. It is mind numbing. The uncle who bequeathed him all these riches must be turning in his grave. It goes without saying that this is exactly what you do not want to be doing with your money. I hope you can savour the extreme irony in how his uncle lived frugally and invested steadily for decades to make his millions and how his idiotic nephew blew it all in a few dumb years. Below is a full cut and paste of this reddit post with some edits to highlight some of the most absurd passages. Let this be a cautionary tale in greed and hubris. You can’t make this stuff up (however, it is the internet, and reddit in particular, and upon further research, I can’t ascertain whether this is true or the greatest troll job of all time – take it for what you will).

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Quick Update: Books, Coursera, and Valuation

As it seems to happen often, my interest in writing tends to ebb and flow depending on the seasons. Sometimes I feel like I need to unload all of the things I’m learning pen-to-paper over here. Other times, I’m learning and reading but have little desire to write down my thoughts as I am deep inside my own mind, twisting and turning information/knowledge/wisdom/etc and trying to come to terms with insights.

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Recovering from Nasal Surgery

For as long as I can remember, I’ve always had issues breathing through my left nostril. Turns out I had a severely deviated septum. I had surgery to get it fixed earlier this week and now in recovery mode. The recovery process has been… uncomfortable. Not painful really, just really, really uncomfortable. I’m also weird and absolutely do not want to take the Tylenol 3s. Being Canadian, the whole process from seeing the doctor, then the nasal specialist, then the surgery, was all… free. Blows my mind. I feel very fortunate and grateful to live in such a wonderful country in this day and age. Anyways, things might be a little quiet around here until the end of the month. I am, however, active on Twitter so if you want to see what I’m thinking about in under 120 characters, connect with me over there. Come to think of it, I have been much more active on Twitter in the last few months. It’s a great platform once you get your bearings. Anyways, I am on hiatus over here for the next little while, which I am blaming entirely on my nasal surgery and the need to recover.