Lecture Notes

Introduction

• Lecturer begins with some humor and insights into NYU's tuition and the ambience of the classroom.
• Mentions the room as the largest available and discusses convincing children to choose NYU.
• Critiques university visits and promises made by universities.

Knowing Your Audience

• Emphasizes the importance of knowing the audience.
• Queries about non-Stern undergraduates and whether they've received emails.
• Importance of having a Stern email address for accessing course materials.

Class Composition

• Queries about the number of seniors in the class.
• Mentions that seniors mentally check out before official graduation.
• Plan to cover material before seniors leave mentally.

Course Approach and Structure

• Introduction to the class, stating it will begin with a quiz every session.
• Main focus: Valuation of companies, though the term 'equity' is used improperly.
• Seeks students’ motives for taking the class - wealth, career, knowledge.
• Explains intention to teach valuation properly, critiquing some current industry practices.

Understanding Valuation

• Valuation can be seen as a science, art, or magic.
• Review of left-brain (numbers) vs. right-brain (storytelling) dominance.
• Personal anecdotes to illustrate how early we understand our strengths.
• Encourages students to identify their strengths in numbers or storytelling.

Storytelling vs. Number Crunching

• Valuation combines numbers and storytelling.
• Importance of having a balance between discipline (numbers) and imagination (storytelling).

Office Hours and TA Support

• Lecturer’s office is in the business school building.
• Uses a “fair game” principle for student interaction.
• Introduces Teaching Assistants (TAs) and their roles.

Course Materials and Logistics

• Everything will be delivered digitally due to logistical reasons.
• Importance of accessing and downloading course materials.
• No books required, although recommended readings are available.

Course Content Overview

• Distinguishes between value and price.
• Value is driven by cash flows, growth, and risk.
• Price is influenced by demand, supply, mood, and momentum.
• Application of behavioral finance to valuation and pricing.
• Introduction to different valuation aspects: public/private companies, startups, market conditions.

Tools and Techniques

• Use of discounted cash flow (DCF) for valuation.
• Discussion on specific valuation contexts: pharmaceutical companies, commodities, etc.
• Emphasis on options as a valuation tool for certain investments.

Communication

• Frequent communication promised through emails covering class updates, projects, and weekly challenges.
• Introduction of a