NYU Professor: Bubbles Drive Innovation Despite Volatility
• Bubbles are how markets deal with change and innovation, according to NYU finance professor Aswath Damodaran. He argues they have a lasting, positive impact.
• Damodaran believes the benefits of innovation that stems from bubbles outweigh the volatility costs. He points to the dot-com bubble as an example.
• Historical bubbles like 19th century British railway mania often led to economic growth despite speculation and losses.
• Investors shouldn't worry about bubbles and instead focus energy on valuations not in a bubble, says Damodaran.
• He argues investors shouldn't criticize others buying stocks they think are overvalued like Nvidia.