As investors watch every move made by the U.S. central bank, with traders seeing a 100% probability of a July interest rate reduction, they're losing sight of what really matters for markets, said Aswath Damodaran, finance professor at New York University's Stern School of Business.
"The Fed obsession is a little strange to me," the valuation expert told CNBC's "Fast Money" on Wednesday. "We've gone through waves of this Fed-watching for the last decade and, looking back, I think it's more smoke than any real effect."
From his perspective, what should matter for stocks more than monetary policy is what the underlying companies themselves are doing.
"Ultimately, this is going to be about growth and earnings, and I think the earnings reports coming out next week are going to matter a lot more than what the Fed actually does," he said. "In the short term, the Fed might have some effect, but if those earnings don't come in, then I don't think the Fed can do much to keep the market sustained."
"I think value ultimately cannot just come from looking at existing earnings. It's got to come from looking at future growth as well," he said, referring to some of the big-cap technology companies that helped propel the S&P from 2,000 in 2014 to its latest milestone. "And, at the right price, I would buy some of these high-growth companies."
Damodaran, who said he bought Tesla's controversial stock when it was trading at the $180 level a month ago, added that price-earnings ratios shouldn't be the sole determining factor when it comes to buying into tech.
"My problem with Amazon is not that it's not a great company. I think it's an amazing company. The question [is] whether you can pay the price you pay for Amazon right now and get value from the company," he said.
"I think the way to look at the tech companies is not to think in terms of PE ratios or price-to-book ratios, but to look at what kind of value they can deliver given future growth and to watch for the price at which they can become bargains, because I think that even though they might look highly priced, they can still be cheap on a value basis if you can get them at the right price," Damodaran said.
The key, he said, "is to be patient and have the right timing." And, when it comes to battleground stocks like Boeing, which has been facing twin headwinds from the U.S.-China trade war and issues with its 737 Max planes, perhaps the right timing is a bit longer term.
"Ultimately, ... you've got to face the reality that there are only two companies in this space, Boeing and Airbus. And neither is going anyplace," he said. "I think if you want to hold Boeing, you've got to accept the fact that, in the near term, you're going to get some pain, but it might be a company that ultimately will be able to get around that pain and deliver the returns. So, I would not be worried about investing in Boeing long term, but I'd be worried about trading Boeing short term."
The Dow Jones Industrial Average broke above the 27,000 level for the first time ever Thursday as stocks popped at the opening bell. The S&P, which closed below 3,000 on Wednesday, surged back above that level.