The New York University (NYU) Stern professor and Wall Street’s most trusted valuation expert, Aswath Damodaran, who is widely respected for his data-driven discipline, said for the first time that he is considering not investing in the stock market. He stressed that he doesn’t mind keeping cash idle rather than going all-in on stocks. The analyst said that he intends to park his money in only two places currently, which are cash and collectibles or physical assets. For the first time in his investing life, he revealed that he is preparing for a potential catastrophic market scenario.
The Wall Street expert said that all asset classes have become tightly correlated, so diversification in traditional investment methods no longer works. “You almost have to struggle to find something that doesn’t move with markets. The classic rule of spreading your money across sectors and geographies doesn’t hold up anymore,” Damodaran said.
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Wall Street Analyst Makes Rare Personal Pivot, Says Go Traditional Now in Finances
In a rare personal pivot, the Wall Street valuation expert said that he is shifting to the traditional method of investing. “For the first time ever, I am looking at parking my money into one, cash, and two, collectibles or physical assets,” he said. The physical assets include gold, which he typically avoided for decades. The shift is driven by fear, not fundamentals, he explained.
“Something bad is coming,” warned the Wall Street analyst and NYU professor. “The only way I can explain gold’s rise in a year when stocks are up 15 to 20 percent and interest rates are stable is this: there is a subset of the market saying, I do not believe these numbers,” he exclaimed.
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Damodaran also urged investors to consider reallocating their funds into cash or gold to protect from a downfall. The US stock market could correct between 30% to 35% next, predicted the Wall Street expert. “Even if you have never invested in non-financial asset categories, this might be a time to move a bigger chunk than ever into cash or something close to cash,” he summed it up.