L2’s Scott Galloway asks finance maven Aswath Damodaran of NYU Stern where to find value right now, given that every asset class looks expensive, from social media to modern art.

Damodaran puts the situation in context, noting that the core question is whether you believe a 2% interest rate is too low. The older you are, the more likely you answer yes, since we normalize based on our experiences. But it’s hard to say what a “normal” rate is, since we’ve entered a new phase in markets — the flip side of globalization. Damodaran believes this phase is bringing lower real growth and inflation, and more rolling crises, with a macro crisis every two or three years.

This means rates will stay low but risk premiums will get bigger. So rather than worrying if the rate is too low or high, ask if you’re getting enough of a risk premium. Does Damodaran believe investors are getting enough of a risk premium with U.S. stocks? He does — he hasn’t seen a warning sign that stocks collectively are overvalued.

Where to find bargains right now? Look to Southern Europe across the board, Damodaran says. A reasonably priced company in one of these markets is a double whammy.

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