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Data Update 1 for 2025: The Draw (and Danger) of Data

Musings on Markets

Thus, as you peruse my historical data on implied equity risk premiums or PE ratios for the S&P 500 over time, you may be tempted to compute averages and use them in your investment strategies, or use my industry averages for debt ratios and pricing multiples as the target for every company in the peer group, but you should hold back.

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Data Update 8 for 2025: Debt, Taxes and Default - An Unholy Trifecta!

Musings on Markets

The table below computes debt to capital ratios, in book and market terms, by sector and sub-region: I would begin by separating the financial sector from the rest of the market, since debt to banks is raw material, not a source of capital. Data Update 4 for 2025: Interest Rates, Inflation and Central Banks!

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Data Update 6 for 2025: From Macro to Micro - The Hurdle Rate Question!

Musings on Markets

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.

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Investing Politics: Globalization Backlash and Government Disruption!

Musings on Markets

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. That said, to value companies today, I have no choice but to bring in the economics and politics of the world that these companies inhabit.

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Anatomy of a Market Crisis: Tariffs, Markets and the Economy!

Musings on Markets

Breaking down just US equities, by sector, we can see the damage across sectors: The technology sector lost the most in value last week, both in dollar terms, shedding almost $1.8 In the language of risk, they are demanding higher prices for risk, translating into higher risk premiums.

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Market Resilience or Investors In Denial? A Mid-year Assessment for 2023!

Musings on Markets

In my second data update post from the start of this year , I looked at US equities in 2022, with the S&P 500 down almost 20% during the year and the NASDAQ, overweighted in technology, feeling even more pain, down about a third, during the year.

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Use of Discounted Cash Flow Approaches in US GAAP Accounting

ThomsonReuters

For instance, assume a bank is performing a discounted cash flow analysis for a mortgage. If a bank expects a borrower to make mortgage payments before the contractual due dates, the prepayments would lead to a lower end value in the discounted cash flow calculation than if the payments were made per the contract terms.