The Mag(nificent) Seven: The Seven Stocks that Saved the Market in 2023!
ฝัง
- เผยแพร่เมื่อ 14 มิ.ย. 2024
- In 2023, seven stocks (Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla) increased their collective market capitalization by $5.1 trillion, accounting for close to 60% of the increase in market cap of all 6658 stocks. At the end of 2023, these seven companies had a market cap of $12.2 trillion, greater than the market cap of all listed stocks in China, the second biggest equity market in the world. In this session, I look at three reasons for the success of the Mag Seven, ranging from a correction for the beating they took in 2022, extraordinary business economics (growth & profitability) and a shift to winner-take-all (or most) economics in many industries. I close the session by valuing all seven companies, necessitated by the fact that I own all seven (bought at different points in time), and concluding that while all five are close to fairly valued, two (Nvidia and Microsoft) are over valued. That may be either because I don't have the imagination to see the possibilities of AI or because investors are exaggerating its potential to deliver profits.
Slides: pages.stern.nyu.edu/~adamodar...
Blog Post: aswathdamodaran.blogspot.com/...
Intrinsic Valuations:
Amazon: pages.stern.nyu.edu/~adamodar...
Apple: pages.stern.nyu.edu/~adamodar...
Alphabet: pages.stern.nyu.edu/~adamodar...
Meta: pages.stern.nyu.edu/~adamodar...
Microsoft: pages.stern.nyu.edu/~adamodar...
Nvidia: pages.stern.nyu.edu/~adamodar...
Tesla: pages.stern.nyu.edu/~adamodar...
You tricked me into listening the intrinsic valuation of 7 stocks
Appreciate your insights into the companies! Your valuation is second to none.
"Priceless" is a terrible valuation metric, but its what your classes and lectures are.
No brainer. Semiconductor and AI stocks will dominate 2024. Why I prefer NVIDIA is that they are better placed to maintain long term growth potential, and provide a platform for other AI companies. I have made more than 200% ROI from NVIDIA with the assistance of my fa, I won’t fail to mention. I agree the stock would go higher in the next couple of days.
I bought NVIDIA around September last year because my financiaI-planner recommended it to me…said the company is selling shovels in a gold rush. It accounted for almost 80% of my market return this year.
It's good you make your own research. and make sure whoever you work with is licensed n verifiable with a repute, this monica looks the part but i'd do my due diligence. I set up a call, tnks.
Always a pleasure listening to your lectures professor!
Terrific Video giving anyone a clear and intrinsic value driven tutorial. Thanks Aswath.
19:11 One thing that might explain the lack of impact on revenue from the layoffs at Google and Meta is what areas were actually laid off. Although there are no public data, I can anecdotally say areas such as sales, marketing, R&D, and recruiting saw many more people let go. Core business divisions were left largely left intact. Areas like recruiting probably saw 70-90% of their staff laid off because these companies had slowed/stopped hiring.
Thank you for what you do for humanity ! You are a living legend
Elucidating! Thank you so much, professor! Kind regards from Portugal!
You videos are invaluable
Thank you a lot Teacher. It's always a pleasure to learn from you. I own six of this seven companies so this is very helpful for me.
Valuable and priceless knowledge from professor. Glad to listen and apply your lectures even for people around the globe 🌎
Thank you Professor. Amazing video.
Great video! Thanks for the intrinsic valuation! Of each
Thanks for sharing this.
Wow! Great analysis, great job 🎉 Such a pleasure to listen to you! ❤
That's the 1st clip of your channel the YT algorithmn put in front of my eyes. Maybe 'cause I'm located in the center of the old continent. 😊
Never made such a detailed analysis for myself, nevertheless I have 2 of the mag7 in my portfolio (that's why I was triggered by your clip), since a decade.
Very impressive . Thank you.
Always grateful for everything I've learned from Professor Damodaran's videos and his lectures (and stories) are always entertaining. Also, nice nod to the original Japanese movie on which the Western remake "The Magnificent Seven" (wonderful theme music)
was based.
Absolutely amazing, thanks a lot
Great Analysis , thanks for sharing
Thanks for the analysis sir.
Very valuable, as always.
Great video! Thank you!
Thanks for the analysis
You're eating half of the cake! Because the markets can stay insane and overvalued :D
Thank you sir
Really appreciate the information you are sharing and the level of quality in your content. Thank you for your take and analysis on these companies along with a very tidy framework to study for my future investments
Thank you!
Great content!
Thanks!!!
Great video
Insightful as always thanks for the valuable lessons in investing Professor! Too bad that I can’t offer my “குரு தட்சணை!”
Thanks Professor! Awesome and timely lecture!
Realise that the link to Tesla valuation is not working😅
Great video. I've been slowly learning how to value a company from your courses. I've been just selling PUTs at my intrinsic value calculation and making money while I wait.
The risk is that you are capping your upside, but exposing yourself to more downside. All the good ones go up and you make a little money while your wrong ideas you keep.
Hi Professor, thank you for the updated valuations for the Magnificent 7. The key valuation inputs (growth, terminal margins and reinvestment rate) that you have used for your companies in the main are quite similar to those that you have used previously except for Microsoft's sales / invested capital ratio (the last valuation that I found from you was in Feb 2022 where you used a sales / invested capital ratio of 1.17). This time around you have used a ratio of 3 which has a significant impact on the valuation. I can understand a scenario where their level of reinvestment declines significantly over time but I am surprised by a scenario where it declines immediately. Can you please explain your reasoning for this change? By the way there seems to be a problem with the Tesla valuation download.
Best regards, Rob
🤓great suff...as usual 🤓tnx Prof.
Thank you Mr Damodaran. A brilliant talk. I bought all these stocks back in 2022, not because of any great insight save that I felt one could not afford not to own them. My timing was fortuitous. I have sold a bit of META, NFLX, NVDA along the way for position sizing reasons. Combined they represent about 16% of my portfolio. I think I will reduce that in the coming weeks to 10%
why do you think you can time the market?
@@tecala1 I don’t. I sell to control position size n relation to the whole portfolio.
I’m always caught up in two minds when I sit to review my position sizing, sell a stock that has grown big or buy a few more of the second and third stocks in the list that have the equal potential to out grow the first. I most often settle for the latter when I have no immediate need for the cash that would come my way if sell a winner. Not sure if this a good strategy but it’s just my style of investing I guess.
Thank you so much bro
Couldn't find Tesla excel sheet. Please check the link. Learned a lot through your videos, really appreciate.
Great stuff, I like how your thoughts on the Stock market is in line with my own, the valuations differ a bit, I consider taking profits on Meta soon
Thanks
Wonderful analysis of the Magnificent 7. I would argue that Tesla is not a winner take all stock. The EV market is cooling, while more options are available to the consumer than a couple years ago. I would not discount BYD. They are a vertically integrated manufacturer, which gives them a tremendous competitive edge. Elon Musk has said as much.
22:08 The golden rule of (market) Investing
I would appreciate any references you have for using a sales-to-capital ratio of 4.0 in Tesla's valuation. Is this estimate based on a specific dataset you have access to? It seems significantly higher than other options in the Master Inputs tab, the company's recent ratio, and industry (US and global) data provided in the Inputs sheet.
I find it very valuable and something average Joe can understand and apply as rest all speak to the party and music (which is more like sales and marketing!)
dear Professor Damodaran, many thanks for sharing your thoughts and these models with us. The link to the Excel model for Tesla is not working. Request you to please rectify that as I am very interested in reviewing the numbers that you’ve used in your assumptions.
Sir Great video and lecture as always, we are blessed to be your students- 2 days back Brand Value chart came in the internet, In that also these 7 Samurais play a major role. We assume that Brand Value (monetary values for the Brands) also considered in our market cap calculations, Intrinsic value dcf value calculations sirs
Stocks selection and picking is a huge part to getting profit, I passed the million mark in proceeds on my portfolio couple of months ago, I remember getting started last year with so much red on my portfolio due to my wrong selection and picks, wrong calls and puts, got with an FA who showed the importance of expertise and professionalism on a market so broad, complicated as that of the fin market. He first got me compounding my interest. Thank you Kevin Mikan, I’m so pleased I followed your advice
Indeed, no matter how smart you are; one who’s experienced and also smart always has more to give, investors ought to look more to going about the market this way.
Many thanks for this valuable information! The Tesla download spreadsheet is not working unfortunately.
Thanks for sharing all these great informative videos...Hope you will share a valuation story on IBM. I feel this is one company thats playing some interesting games and will be in a Mag-7 space sometjme in the future
Could you explain the MSFT's sales to capital ratio of 3, which translates into 13bn of reinvestment next year?
Their capex and R&D for the current year is at least 50bn combined and I thought the ratio should be much lower.
Prof. Aswath,
I have been benefiting quite substantially from your TH-cam lectures. Thank you for making them access free.
Please let me know if I’m missing something. But why is it I have not seen any stock evaluation of yours with price target that is above current price? . I really wish to know the answer.
Thank you for the video and the link to your valuations. I really like your videos and your explanations for your valuations. Something it was not explained in your video is why you decided to buy 2 weeks ago Tesla if you thought share price was fair and not at a discount. If you could shed some light on the reasoning it would be great. On the other hand, out of topic, it would be very interesting to see your valuation on a company like Iovance. Thank you.
just watched another video of an interview of his where he answered that questions. "beggars can't be choosers" he said. In the current market hardly anything good is discounted so he is happy to grab something fairly valued
Thanks Aswath, always a pleasure listening to you. will be Going through your Valuation course online. long standing task
Wanted to raise one issue/point related to your video here. you Valued Nvda @ 240 a share 3 months ago, and now @436 a share. I assume you used similar metrics and methods. Why, then could it not be possible for the Market to be right about extrapolating that out to 680 number today. Most likely the Market is pricing in a growth in earnings due Feb 21, which if true could justify 680?
Professor one thing please, i understand why you capitalize r&d expenses but from a project perspective in finance they are sunk costs, don’t you think that expensing them like accountants do can make sense from a matching revenue and costs ? Thank you for all the resources.
Awesome insights, can you do a valuation video on Intel? Stock has done nothing.
Thank you for the fair value spreadsheets. It was useful to look at your assumptions and my own. We're almost exactly identical on our estimate for Alphabet, literally within a few dollars but I am much more sceptical of MSFT so have a far lower intrinsic value for them. It's very interesting to see the different assumptions at play.
I would never buy or look at Tesla as I despise Elon Musk. I don't care what absurd multiple they put on Tesla I want nothing to do with that clown.
Lastly, the margin of safety when selling is something I've never explicitly thought of before, that is a very interesting concept.
Professor, you are a great person to share with us your reflections. I really appreciate it. Thank you.
if there's rate cuts, would the safety premium be removed and reverted to pre rate hike?
All U.S. Stocks without MAG Seven was still a very nice real return. Also, historically a few major companies lead gains, but those companies change. The index is self correcting.
Prof. Thank you! Beyond mag seven and thinking of the next decade … how should one think about short listing the next winners ? ( how are you thinking about it?)
Good question. I would like to backtest his portfolio over the last decade or two. This doesn’t negate the fact that he is exceptionally brilliant and articulate. But ultimately dumb indexes have out performed brilliant investors over long periods.
Great to remind us that it's always appropriate to do a DCF irrespective of our priors and market pricing comps. I just wonder whether an investor should always require higher expected returns from an individual stock compared to a diversified basket of stocks, e.g. S&P500 etf...
Great content, many valuable insights and much hard work that you are making available to all at no cost.
That said, the “margin of safety” when selling, that too based on your personal capital gains rate (i.e. your own tax bracket) makes little sense to me
Selling a stock because it seems overvalued usually goes wrong and you end up cutting the flowers to water the seeds. I owned and now regret selling Amazon, Alphabet, Meta and Nvidia.
You are correct. An index does NOT sell over valued securities. Hence it out performs “actively managed portfolio”. This is one case where “our intelligence” works against us
@@Dividendflywheel In that context, it isn't our intelligence working but rather our fear of a prospective loss. We fear loss more than we enjoy gains.
Hey Professor - any chance you’d be willing to value $BABA or $JD? Would love to hear how you think about China risk and impact on value when these businesses trade for 7x Cash Flow compared to US comps like Amazon trading for >50x+
Thank you Professor!
what discount rate do you use?
Great content as always - but maybe get a consultant (Lol) and de text/visually improve the slides. Would make for better engagement for sure
the link to tesla xls is a bit wrong (with two '.' instead of one)
Prof, I think now is the right time to ask, with people saying china uninvestable, what do you think about Alibaba, JD and the HSI index fair value?
How can he value geo political risk of China invading Taiwan?
@@george6977 ya exactly that's y it makes it so interesting
👍21:50 A great company can be a bad investment; the price you pay matters.
There is no doubt that these are great business but I wonder why such valuation justifications always come at the ATH level vs. the time when their prices were in downtrend in 2022. During that time, everyone was busy lowering their price target
professor why dont you make your portfolio public through your blogpost?
It seems the link to Tesla's spreadsheet is broken
Well dressed today sir
when will you start looking at $PLTR
I am actively searching for ways to invest/diversify my $800k portfolio so it can dramatically increase in folds throughout this next bull run.
Thats when you hire someone to manage your money. You need a financial-advis0r straight up! Even while $400k might seem like much, one bad decision might seriously deplete it.
While the overall stock market is predicted to be bullish, it remains uncertain which sectors will dominate. If you lack expert advice from a financial advisor, avoid re-balancing. Personally, I work with an advisor and my $1.2M portfolio saw a 30% annualized gain in 2023.
how I can get in touch with this advisor as my porfolio isnt doing well?
NICOLE DESIREE SIMON is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly.
What % of the of the market capitalization( only 7 and not whole market cap) of these seven stocks is traded every day?
we all miss out on gainz prof
The reason why Nvidia gets its valuation is because Apple can release its iPhone for $1,300, and people will buy it but they won't buy it if Apple then raises the price another $500. Nvidia releases a product for 1600 and then raises the price again to 2000. When has a company released a flagship product and then raise the price on the customer knowing the customer will still buy Nvidia is a far different company than you've ever seen
Not only that but customers have to beg Nvidia to get product. I wouldn't be surprised if Nvidia charges extra for larger orders (instead of a quantity discount).
? Why did Tesla’s Adjusted Margin decrease when you capitalized their R&D unlike all the others? (15.5 to 11.22)
Because he had to amortised R&D done in previous years as well so the amortisation from R&D > R&D investment this year which is why margins can decrease
The tatty margin is 15%. Their current margin is lower than 11.22%.
The excel files cannot be downladed.
Nvidia at the current stage is very difficult to value. It might double from here because the demand can go even higher and AMD can fail to capture market. But also the opposite can happen and ratios will compress. Markets expects positive outcome. Lets see
what are those 5 stocks
Sir, Could you please value PayPal at this price and growth ? Is it value trap?
Already buyed tsla at 178.60 :)
Why instead of selling them, don't you guarantee some profits by sell call options against the stock (covered calls)? you'd take risk off the table, in case of a turn, and ensure you get paid a little more if it continues to run. Your returns would be boosted and you might be able to avoid the capital gains for a while.
'People aren't rushing for the exits' on Amazon Prime Ads.. my folks cancelled instantly as soon as they were told they were getting ads. I canceled. Have several friends that canceled.
Maybe it's birds flock together, or people hate ads.
Everybody canceled Netflix after a rate hike maybe 10 years ago, and then came back the next year. They stopped complaining and put up with the many rate hikes since then. Not saying your friends and family will come back to Amazon prime, but if history is any guide…
Margin of satety for selling 😮
please tell us the seven companies that'll be in this position 15 years from now. that would be helpful otherwise they didn't save the market last year. That's the whole point. none of us know.
To think if I'd just jumped on the FAANG bandwagon a decade ago I'd have done extremely well annoys me so much.
Why is Tesla given the same valuation as tech companies?
The only piece of tech to their name is FSD and that bill of goods can easily be clawed back in a class action law-suit.
Being half-right is better than fully wrong after all
Nothing stays undervalued forever LOL , Paypal says HI
Do nod redem
sell half!
Nvidia being that overvalued should be a red flag. You need to look at nvidia's trailing earnings over the last 20 years and noticed that it's very Lumpy. My guess, is that you're using nvidia's trailing numbers as inputs and only half of those numbers are relevant while the other half are from Nvidia down cycle. If you do this in 3/4 after Nvidia has better trailing numbers, then it won't look overvalued, or you can use an analyst estimate. Nvidia has done 100% years that hold as a new Baseline for the future, and that's why it can look overvalued but it'll do the numbers
Couldn't find tesla excel sheet.
Can we get him to be president of US 🇺🇸
I think you're telling a very optimistic story about the 5 year future of the 7 companies from this point in time. I believe that this soft landing narrative that has been spun by the market as highly probable is in fact a delusional and highly optimistic take on the future state of the economy. This is based on simple analysis of how fed funds rate hikes have interacted with the labor market in the past. People say that recessions are hard to predict, but go back in history and they ALWAYS come roughly 2 years after a sudden rate hike. I know this hypothesis of mine is not really the topic of discussion at hand in your video here, but I think it pertinent to mention considering the fact that you seem to be adamant in implying that the value the market is assigning to these companies is reasonable. I highly disagree with you here, which is a rare occurrence.
The Professor is probably right about Tesla stock as he is about most things investing, but I will not put my money with a jerk like Elon Musk.
I thought exactly the same about Zuck in 2022 and did not invest in META when it was around $90.
P R O M O S M