High-risk stock in politics: Aswath Damodaran on why he wouldn't negotiate with Trump

Aswath Damodaran, valuation guru and professor of finance at New York University's Stern School of Business, has called Donald Trump an "absolutely unpredictable" leader whose erratic style leaves counterparts and nations guessing.

In an interview with NDTV, Damodaran said Trump's approach mirrors his earlier tactics in real estate. "I've watched Donald Trump through his first presidential term for four years, and now the word I would use to describe him is absolutely unpredictable. Normally, you can take a look at a person's history and look at their mindset and say this is what they're probably going to do. And Donald Trump - it's almost impossible to figure out what that next step is," he said.

He argued that Trump uses unpredictability as a negotiation tool. "He will tell you this that is his art of the deal because he's negotiating with people who are so uncertain about what he's going to do next. He gets better deals for himself. He does keep people off balance. I would not want to be negotiating with Donald Trump because I have no idea where he's coming from the next minute. So, what you're seeing though is what he used to do in real estate play out on the global face. And the real estate was another real estate person who probably felt the brunt of this uncertainty. Now you have leaders of nations feeling the effects of somebody who's completely unpredictable."

Damodaran's comments come amid difficult ties between India and the U.S., with Trump imposing a 50% tariff on Indian imports of Russian oil and publicly warning about New Delhi's alignment with Moscow and Beijing.

Asked to compare Trump to a stock, Damodaran said he would classify him as high-risk. "I would say it's a high-risk stock. It's an extremely volatile stock. It's a Tesla on a global stage because Elon Musk is many of the same things right...If he were a stock, he's a stock with a very strong following. It's like a very loyal customer base, but I have no idea where he's going. He's going to take them wherever he wants to take them, and that's going to be incredibly unpredictable."

He added that Trump's political persona shifts constantly. "High-risk stock, but I don't know what business you're in. You keep changing your mind. Today you're a retail company, tomorrow you're a manufacturing company because you're effectively whatever you woke up that morning and said you were going to be."

By contrast, Damodaran said Chinese President Xi Jinping would be a more predictable stock, albeit a ruthless one. "He'd be a very predictable stock in many ways except if you did things that really get in his way as a company. I have a sense that he's pretty ruthless about the endgame. And if he were a stock, he'd be more predictable than Trump. But if you got on his wrong side, God help you."

He recalled Beijing's sudden clampdown on tech giants like Tencent and Alibaba as a reminder of Xi's unpredictability when crossed. "They went from being allies to adversaries essentially overnight. So, I wouldn't be sleeping on my job because I'd worry about that shift coming. So, he's predictable for the most part unless you're doing something that's not in his larger mission."