Musings on Markets

FEBRUARY 8, 2025

In the first five posts, I have looked at the macro numbers that drive global markets, from interest rates to risk premiums, but it is not my preferred habitat. The second set of inputs are prices of risk, in both the equity and debt markets, with the former measured by equity risk premiums , and the latter by default spreads.

Risk Premium 74

Risk Premium Beta Start-ups Equity 74

Musings on Markets

JANUARY 24, 2024

As we start 2024, the interest rate prognosticators who misread the bond markets so badly in 2023 are back to making their 2024 forecasts, and they show no evidence of having learned any lessons from the last year.

Treasury 52

Treasury Risk Premium Start-ups Risk-free Rate 52

Musings on Markets

OCTOBER 4, 2023

Price of Risk The drop in stock and bond prices in the third quarter of 2023 can partly be attributed to rising interest rates, but how much of that drop is due to the price of risk changing? below the actual index level of 4288, making it close to fairly valued. below the index value of 4288, confirming my base case conclusion.

Marketability 123

Marketability Start-ups Risk Premium Treasury 123

Global Finance

MARCH 5, 2025

With the peso stabilized, inflation reached 117% in December 2024, down from 292% from the years high in April, and the use of the dollar is expected to increase, including for day-to-day transactions. This may allow the country to reduce the risk premium attached to its international borrowing. However, there are pros and cons.

Banking 59

Banking Finance Risk Premium Marketability 59

Musings on Markets

JANUARY 6, 2023

When valuing or analyzing a company, I find myself looking for and using macro data (risk premiums, default spreads, tax rates) and industry-level data on profitability, risk and leverage. I do report on a few market-wide data items especially on risk premiums for both equity and debt. Debt breakdown 2.

Risk Premium 52

Risk Premium Dividends Start-ups EBITDA 52

Valutico

DECEMBER 12, 2023

See below for the latest set of upgrades and watch this space in early 2024 for more to come soon. New Professional Report Style: What? Stay tuned for more exciting and significant updates coming in early 2024. We’ve completely modernized the report style, ensuring a more user-friendly experience. Why Important?

Risk-free Rate 52

Risk-free Rate Risk Premium Market Risk Marketability 52

Simply Treasury

AUGUST 2, 2022

The definition of "net equity" is as follows: equity of the company = sum of subscribed capital, share premiums, revaluation reserves, reserves and retained earnings, minus the tax value of the company's holdings in associated companies and the tax value of its own shares. risk premium if the company is an SME as defined by European law).

Equity 52

Equity Risk Premium Banking Finance 52

Musings on Markets

FEBRUARY 2, 2023

Finally, my starting cost of capital of 10.15% reflects the reality that the riskfree rate and equity risk premiums have risen over 2022, and my ending number of 9% is an indication that I expect Tesla to become less risky over time.

Start-ups 99

Start-ups Risk-free Rate Market Capitalization Marketability 99

Appraiser Newsroom

MAY 1, 2024

Insurance industry terminology such as risk, premium, loss, deductibles, coverage limits, and perils are some of the fundamental concepts appraisers must grasp. Register for ASA’s PP163 Property Insurance Fundamentals: What Appraisers Need to Know webinar on June 6, 2024 from 2:00-3:00 PM EDT, presented by Thomas Dawson, ASA.

Appraisal 40

Appraisal Risk Premium Marketability 40

Musings on Markets

JANUARY 28, 2024

In short, if you don't like betas and have disdain for modern portfolio theory, your choice should not be to abandon risk measurement all together, but to come up with an alternative risk measure that is more in sync with your view of the world.

Risk Premium 121

Risk Premium Beta Start-ups Equity 121

Musings on Markets

JULY 24, 2024

After the 2008 market crisis, I resolved that I would be far more organized in my assessments and updating of equity risk premiums, in the United States and abroad, as I looked at the damage that can be inflicted on intrinsic value by significant shifts in risk premiums, i.e., my definition of a crisis.

Risk Premium 77

Risk Premium Equity Start-ups EBITDA 77

Musings on Markets

JANUARY 17, 2025

In my last post , I noted that the US has extended its dominance of global equities in recent years, increasing its share of market capitalization from 42% in at the start of 2023 to 44% at the start of 2024 to 49% at the start of 2025.

Equity 129

Equity Risk Premium Treasury Start-ups 129

Musings on Markets

MAY 3, 2025

Finally, I classified companies based upon their stock price performance in 2024 to see if what we are seeing in 2025 is just a correction of overreach in 2024. In fact, the year-to-date numbers for 2025 indicate that momentum remains in the driver's seat, extending a long period of outperformance.

Marketability 95

Marketability Start-ups Treasury Risk Premium 95

Musings on Markets

JANUARY 28, 2025

We started 2024 with the consensus wisdom that rates would drop during the year, driven by expectations of rate cuts from the Fed. In this post, I will begin by looking at movements in treasury rates, across maturities, during 2024, and the resultant shifts in yield curves.

Banking 71

Banking Treasury Risk Premium Start-ups 71

Musings on Markets

JANUARY 31, 2025

A little over a year later, in September 2024, that question about AI seemed to have been answered in the affirmative, for most investors, and I posted again after Nvidia had a disappointing earnings report , arguing that it reflected a healthy scaling down of expectations.

Start-ups 134

Start-ups Marketability Technology Risk Premium 134

Musings on Markets

FEBRUARY 23, 2025

Measuring the Debt Burden With that tradeoff in place, we are ready to examine how it played out in 2024, by looking at how much companies around the world borrowed to fund their operations. to3.5%) during the year.

Equity 77

Equity EBITDA Risk Premium Gross Debt 77

Musings on Markets

APRIL 20, 2025

Instead, you will have to revalue the company, with adjustments to expected cash flows and risk premiums, given the crisis, and if that value exceeds the price, you should buy the stock. Contrarian Investing: The Psychological Tests! In the abstract, it is easy to understand the appeal of contrarian investing.

Start-ups 136

Start-ups Price to Book Marketability Equity 136

Musings on Markets

MARCH 15, 2025

Thus, my estimates of equity risk premiums, updated every month, are not designed to make big statements about markets but more to get inputs I need to value companies. Not only does the world tilt more authoritarian than democratic in 2024, the trend line indicates that the world is becoming less democratic over time.

Start-ups 132

Start-ups Risk Premium Marketability Equity 132

Equidam

APRIL 22, 2025

Discount Rates / Risk Premiums: The discount rate used in DCF analysis (often the WACC) incorporates elements sensitive to market conditions. [21] 21] [22] [24] [27] The cost of equity component includes the market risk premium the excess return investors expect for investing in the broader market over a risk-free rate.

Discounted Cash Flow 52

Discounted Cash Flow Marketability Risk Premium Start-ups 52

Equidam

APRIL 22, 2025

10] , [23] , [2] Discount Rate: The rate used to discount future cash flows is typically the cost of equity, calculated via the Capital Asset Pricing Model (CAPM): Cost of Equity = Risk-Free Rate + Beta * Market Risk Premium. [23] 23] Risk-Free Rate: Tied to government bond yields (e.g.,

Discounted Cash Flow 64

Discounted Cash Flow Terminal Value Marketability EBITDA 64

Reynolds Holding

MARCH 25, 2025

14] Investment Company Institute, 2024 Investment Company Fact Book , at 22-23. [15] 17] See [link] (showing the United States has among the lowest equity risk premiums in the world); Luzi Hail and Christian Leuz, International Differences in the Cost of Equity Capital: Do Legal Institutions and Securities Regulation Matter?,

Corporate Finance 45

Corporate Finance Finance Banking Marketability 45

Global Finance

OCTOBER 29, 2024

Global Finance: What surprised you in 2024? There are certain sectors that we think are offering better risk/reward. So, credit spreads have gotten so tight and so compressed that there’s not much of a cyclical risk premium. In investment grade bonds, we’re now at spreads of 80 basis points.

Start-ups 98

Start-ups Finance Private Equity Firm Equity 98

Reynolds Holding

FEBRUARY 23, 2025

NYU Business School Professor Damoradans widely used valuation data, for example, currently shows the United States as having among the lowest equity risk premiums in the world. [3] capital markets have grown ever larger over time, currently representing over $62 trillion in equity market capitalization up $11 trillion in 2024 alone.

Systematic Risk 45

Systematic Risk Marketability Equity Risk Premium 45

Musings on Markets

FEBRUARY 6, 2025

In this post, I will expand my analysis of data in 2024, which has a been mostly US-centric in the first four of my posts, and use that data to take you on my version of the Disney ride, but on this trip, I have no choice but to face the world as is, with all of the chaos it includes, with tariffs and trade wars looming.

Risk Premium 69

Risk Premium Start-ups Enterprise Value Equity 69