Episode Details

In 2024, the US equity indices were up strongly, but not all groupings of stocks shared in the spoils. In this session, I slice US equities down, first by sectors and industries, to identify winners and losers in 2024. I follow up by breaking down companies by market capitalization, into small and large, and argue that the small cap premium, a staple for both valuation practitioners and investors, has disappeared in the last five decades. I also look at stocks broken down by price to book, a simplistic proxy for value, and argue that the value premium has also gone into hibernation. Since momentum is pointed to as a culprit for the fading of both the small cap and value premiums, I finally look at stock returns in 2024, with stocks classified by momentum. If there is a core message in the data, it is that investing and valuation practices based upon historical data and a trust in mean reversion are becoming indefensible. As Bob Dylan would put, "the times they are a'changig", and we need to change with them.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/DataUpdate3for2025.pdf
Blog Post: https://aswathdamodaran.blogspot.com/2025/01/data-update-3-for-2025-slicing-and.html
Data links:
1. My small cap premium calculator (using Ken French data): https://pages.stern.nyu.edu/~adamodar/pc/blog/SmallCapPremiumTest.xlsx
2. My value premium calculator (using Ken French data): https://pages.stern.nyu.edu/~adamodar/pc/blog/ValuePremiumHistory.xlsx

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