Framing Judgment

When Vasant Dhar built a bot trained on Aswath Damodaran's entire published output, the result was instructive and clarifying. The bot could reproduce the linguistic style of Damodaran's analysis and follow his discounted cash flow methodology with reasonable fidelity. What it could not replicate was the step that precedes the methodology: the decision about what story to test. When Damodaran looks at Walgreens, Starbucks, and Intel and decides to group them together as “aging companies refusing to age gracefully,” he has not yet opened a spreadsheet. He has made a framing judgment—a decision about which narrative lens will reveal the most important features of the valuation problem—and that judgment is constitutively prior to any methodology that could be trained into a model. The framing judgment is not a step in the analytical sequence; it is what makes the analytical sequence possible by determining what questions the sequence will answer. A different framing—grouping Walgreens with