Data Update 3 for 2025: The times they are a’changin’!

In his third 2025 data update, Professor Aswath Damodaran—renowned valuation expert at NYU Stern and lecturer at IMAA—dives into the shifting dynamics of the U.S. equity market in 2024. While the market posted strong overall gains, Damodaran warns that beneath the surface, the traditional investing playbooks are showing cracks. Sector performance was uneven, with tech and communications leading, while sectors like real estate and healthcare stagnated.

Damodaran critically examines the long-assumed “small cap” and “value” premiums, showing that both have faded significantly over the past decades. His analysis suggests these strategies may no longer deliver the excess returns they once promised. Instead, he finds momentum—especially in mega-cap tech stocks like the “Mag Seven”—driving market returns.

He cautions investors, traders, and policymakers alike: adapt to structural market changes, challenge outdated beliefs, and rethink valuation approaches in an age where passive investing, consolidation, and shifting fundamentals are rewriting the rules.