Narrative and Numbers
In business, there are the storytellers who spin compelling narratives and the number-crunchers who construct meaningful models and accounts. Both are essential to success, but only by combining the two can a business deliver and sustain value. Through a range of case studies, Narrative and Numbers describes how storytellers can better incorporate and narrate numbers and how number-crunchers can calculate more imaginative models that withstand scrutiny. It reveals the benefits, challenges, and pitfalls of weaving narratives around numbers and how one can best test a story's plausibility.
"Damodaran's success in combining storytelling with traditional financial analysis and valuation is unprecedented. The book has the potential to be a cornerstone of both traditional valuation and business "pitching" as it shows how individuals from each world can benefit from co-opting tools from the other. The author takes us on his personal journey into the realization that numbers need a narrative in order to make them persuasive."
— Paul Johnson, Nicusa Investment Advisors
"Professor Damodaran's point-counterpoint case studies make valuation a good read. Self-critical in his contemporary examples, he wisely cautions the reader that quality valuation requires both the right and the left side of one's brain―the number cruncher and the storyteller."
— Thomas E. Copeland, University of San Diego
"Damodaran, instructor to many on valuation, clearly demonstrates that quantitative valuation formulas are not sufficient: they must be applied with a more qualitative narrative about the business. But qualitative analysis has its dangers, not the least that we insert our own biases into the narrative. Damodaran nicely weaves stories into the more formal quantitative analysis, with check and balances that yield a more confident valuation."
— Stephen Penman, author, Accounting for Value
"No one has contributed more to the craft of valuation than Aswath Damodaran. In Narrative and Numbers, he correctly shows that you can't understand the stock without the story. After Damodaran's eye-opening tour, you will forever appreciate the vital contribution of human nature to number-crunching."
— Michael Mauboussin, Head of Global Financial Strategies, Credit Suisse
"Damodaran takes us to the place where Joseph Campbell, Warren Buffett, and the best quantitative analyses of Nassim Taleb intersect, and his journey uncovers new value and risk missed by analysts who bias themselves by relying solely on storytelling or number-crunching. It's a hero's journey best supported by humility―and this first-person account of Aswath's own evolving narratives, analyses, and valuations of Alibaba, Amazon, Uber, Theranos, Ferrari, and more. He may have started as a quant, but Damodaran's now one of the most balanced analysts―and wonderful business and financial storytellers―writing and teaching today."
— David Foster, CEO, Business Valuation Resources
"Read Narrative and Numbers if: You’re even the slightest but curious about adding a little storytelling to your number crunching the next time you research an investment."
— Angele McQuade Better Investing