Musings on Markets

MAY 6, 2022

The nature of markets is that they are never quite settled, as investors recalibrate expectations constantly and reset prices. Clearly, we are not in one of those time periods, as markets approach bipolar territory, with big moves up and down.

Risk Premium 92

Risk Premium Treasury Start-ups Equity 92

Andrew Stolz

JANUARY 28, 2022

Idemitsu Kosan’s revenue breakdown 2020. I think that the market is too pessimistic about the long-term outlook. Historically, Japan has a very low risk-free rate. Ramp-up of CAPEX necessary to ensure longevity. Attractive dividend yield could rise to 2x Japanese average. Download the full report as a PDF.

Dividends 52

Dividends Risk-free Rate Net Debt Equity 52

Musings on Markets

JANUARY 8, 2022

To start the year, I returned to a ritual that I have practiced for thirty years, and that is to take a look at not just market changes over the last year, but also to get measures of the financial standing and practices of companies around the world. I was a believer in big data and crowd wisdom, well before those terms were even invented.

Risk Premium 91

Risk Premium Start-ups Market Capitalization Corporate Finance 91

Musings on Markets

JANUARY 12, 2021

I take the point of view that uncertainty should not stop you from valuing companies, that your value estimates will have more error in them, but since the market also faces the same uncertainty, your best bargains may be in the midst of uncertainty. That tells me three things.

Corporate Finance 52

Corporate Finance Start-ups Finance Marketability 52

Musings on Markets

JANUARY 20, 2021

Investors are constantly in search of a single metric that will tell them whether a market is under or over valued, and consequently whether they should buying or selling holdings in that market. Note that nothing that I have said so far is premised on modern portfolio theory, or any academic view of risk premiums.

Risk Premium 52

Risk Premium Risk-free Rate Equity Dividends 52

ThomsonReuters

MAY 6, 2021

An entity may draw from its own experience as well as that of its peers, industry, geography, market, or other pertinent source. The Codification often provides guidance on how to select a discount rate for a particular area of accounting. The risk premium may incorporate factors such as credit risk or market illiquidity.

Discounted Cash Flow 52

Discounted Cash Flow Risk-free Rate Risk Premium Intangible Assets 52

Musings on Markets

JANUARY 21, 2023

It is the nature of stocks that you have good years and bad ones, and much as we like to forget about the latter during market booms, they recur at regular intervals, if for no other reason than to remind us that risk is not an abstraction, and that stocks don't always win, even in the long term.

Equity 70

Equity Risk Premium Start-ups Dividends 70

Musings on Markets

JANUARY 5, 2024

Thus, looking at only the companies in the S&P 500 may give you more reliable data, with fewer missing observations, but your results will reflect what large market cap companies in any sector or industry do, rather than what is typical for that industry.

Dividends 98

Dividends Risk Premium Equity Book Value 98

Musings on Markets

JANUARY 26, 2023

My last valuation of Tesla was in November 2021, towards its market peak, and given its steep fall from grace, in conjunction with Elon Musk's Twitter experiment, it is time for a revisit. billion, a remarkable achievement by itself, but COVID gave the company a boost, as revenue have increased about 250% in the 2020-22 time-period.

Start-ups 80

Start-ups Marketability Risk Premium Equity 80

Musings on Markets

JANUARY 31, 2024

In my last three posts, I looked at the macro (equity risk premiums, default spreads, risk free rates) and micro (company risk measures) that feed into the expected returns we demand on investments, and argued that these expected returns become hurdle rates for businesses, in the form of costs of equity and capital.

Equity 79

Equity Book Value Start-ups Corporate Finance 79

Musings on Markets

MAY 24, 2021

As we approach the mid point of 2021, financial markets, for the most part, have had a good year so far. All of these measures, no matter how carefully designed, give a measure of inflation in the past, and markets are ultimately concerned more with inflation in the future.

Treasury 55

Treasury Start-ups Risk Premium Price to Book 55