EBITDA Market Capitalization Risk Premium 
Musings on Markets
JANUARY 10, 2025
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.
Musings on Markets
APRIL 7, 2025
In percentage terms, energy stocks have lost the most in value, with market capitalizations dropping by 14.2%, dragged down by declining oil prices. In the language of risk, they are demanding higher prices for risk, translating into higher risk premiums.
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Musings on Markets
JANUARY 5, 2024
Since I am lucky enough to have access to databases that carry data on all publicly traded stocks, I choose all publicly traded companies, with a market price that exceeds zero, as my universe, for computing all statistics. Beta & Risk 1. Equity Risk Premiums 2. Return on (invested) capital 2. Debt Details 1.
Musings on Markets
JANUARY 6, 2023
Thus, without a sense of what comprises a high or low profit margin for a firm, or what the cost of capital is for the typical company, it is easy to create "fairy tale" valuations and analyses. Data universe : In my sample, I include all publicly traded firms with market capitalizations that exceed zero, traded anywhere in the world.
Musings on Markets
MARCH 19, 2022
The overriding message in all of this data is that Russia/Ukraine war has unleashed fears in the bond market, and once unleashed that fear has pushed up worries about default and default risk premia across the board.
Musings on Markets
FEBRUARY 27, 2023
In this section, I will lay out a mechanism for evaluating the effects of borrowing on the cost of funding a business, i.e., the cost of capital, and talk about why firms may under or overshoot this optimal. Debt to EBITDA, Interest Coverage Ratios If debt to capital is not a good measure for judging over or under leverage, what is?
Musings on Markets
APRIL 20, 2025
With individual stocks, that danger gets multiplied, with investors buying stocks that are being sold off to for legitimate reasons (a broken business model, dysfunctional management, financial distress) and waiting for a market correction that never comes. Contrarian Investing: The Psychological Tests!
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