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In Search of a Steady State: Inflation, Interest Rates and Value

Musings on Markets

Inflation: The Full Story I wrote my first post on this blog in 2008, and inflation merited barely a mention until 2020, though it is an integral component of investing and valuation. As the inflation bogeyman returns, the worries of what may need to happen to the economy to bring inflation back under control have also mounted.

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Data Update 2 for 2021: The Price of Risk!

Musings on Markets

Note that nothing that I have said so far is premised on modern portfolio theory, or any academic view of risk premiums. It is true that economists have researched risk aversion for centuries and concluded that investors are collectively risk averse, and that the level of risk aversion varies across age groups, income levels and time.

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Use of Discounted Cash Flow Approaches in US GAAP Accounting

ThomsonReuters

The adjustment added to the risk-free rate to arrive at the risk-adjusted rate is often referred to as the “risk premium.” The risk premium reflects that market participants require compensation for taking on uncertainty. The risk premium may incorporate factors such as credit risk or market illiquidity.

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Arbitrage Pricing Theory (APT) - Can it Enhance Valuation?

Equilest

In this blog post, we will explore the key principles of the APT and provide a comprehensive guide on how to use it to make informed investment decisions. And the factor loading for country risk might be 0.1, meaning that 10% of the stock's risk is specific to the country in which the company is based. x 5%) + (0.2 x 4%) + (0.1

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Private company valuation: Better understand your worth

ThomsonReuters

When submitting financials as part of your loan package, consider accompanying them with voluntary disclosures similar to the ones that public companies provide about non-GAAP financial measures, and in the MD&A and risk factor sections of their SEC filings. Visit our estore today.

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Data Update 3: Inflation and its Ripple Effects!

Musings on Markets

Corporate Bonds: No Shortage of Risk Capital In my last post, I chronicled the movement in the equity risk premium, i.e. the price of risk in the equity market, during 2021, but the bond market has its own, and more measurable, price of risk in the form of corporate default spreads.

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Tesla in 2023: A Return to Reality, The Start of the End or Time to Buy?

Musings on Markets

I don't own a Tesla, and have only driven someone else's Tesla, but as readers of this blog know, I valued Tesla for the first time in 2014, and I keep returning to the scene of the crime. I drive a 2010 Honda Civic, a perfectly serviceable vehicle that is never going to get oohs and ahas from onlookers, but I feel no urge to value Honda.