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. In this role, the cost of capital is an opportunity cost, measuring returns you can earn on investments on equivalent risk.

Risk Premium 74

Risk Premium Beta Start-ups Equity 74

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. Many of these hiring firms have supply chains that stretch across the world and sell their products and services in foreign markets.

Start-ups 131

Start-ups Risk Premium Marketability Equity 131

Global Finance

OCTOBER 29, 2024

Meghan Robson, head of US Credit Strategy for BNP Paribas, speaks to Global Finance about directional forecasts and what to expect post-election. Global Finance: What surprised you in 2024? Data has been better than we expected, not only in the labor market but also consumer spending remains very resilient.

Start-ups 98

Start-ups Finance Private Equity Firm Equity 98

Musings on Markets

AUGUST 5, 2023

If you have been reading my posts, you know that I have an obsession with equity risk premiums, which I believe lie at the center of almost every substantive debate in markets and investing. That said, I don't blame you, if are confused not only about how I estimate this premium, but what it measures.

Risk Premium 98

Risk Premium Equity Start-ups Treasury 98

Andrew Stolz

AUGUST 4, 2020

Definition of Equity Risk Premium. It is the difference between expected returns from the stock market and the expected returns from risk-free investments. What Impacts the Equity Risk Premium? How Do You Calculate Equity Risk Premium? Why is the Equity Risk Premium Important?

Risk Premium 52

Risk Premium Equity Risk-free Rate Dividends 52

Musings on Markets

OCTOBER 4, 2023

That recovery notwithstanding, uncertainties about inflation and the economy remained unresolved, and those uncertainties became part of the market story in the third quarter of 2023. The Markets in the Third Quarter Coming off a year of rising rates in 2022, interest rates have continued to command center stage in 2023.

Marketability 123

Marketability Start-ups Risk Premium Treasury 123

Harvard Corporate Governance

AUGUST 11, 2023

We also investigate whether litigation conveys valuable information to the market and how the competitive landscape changes both for indicted firms and their direct competitors. This post is based on their recent paper.

Risk Premium 189

Risk Premium Corporate Finance Marketability Finance 189

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 95

Equity Risk Premium Start-ups Dividends 95

Musings on Markets

FEBRUARY 8, 2022

In the first few weeks of 2022, we have had repeated reminders from the market that risk never goes away for good, even in the most buoyant markets, and that when it returns, investors still seem to be surprised that it is there. In closing, I will talk about some of the more dangerous delusions that undercut good risk taking.

Risk Premium 92

Risk Premium Beta Start-ups Equity 92

Musings on Markets

JANUARY 5, 2024

I have also developed a practice in the last decade of spending much of January exploring what the data tells us, and does not tell us, about the investing, financing and dividend choices that companies made during the most recent year.

Dividends 106

Dividends Risk Premium Equity Book Value 106

Musings on Markets

AUGUST 15, 2023

In every introductory finance class, you begin with the notion of a risk-free investment, and the rate on that investment becomes the base on which you build, to get to expected returns on risky assets and investments. What is a risk free investment? Why does the risk-free rate matter?

Risk-free Rate 98

Risk-free Rate Treasury Risk Premium Start-ups 98

Musings on Markets

JANUARY 30, 2023

If 2022 was an unsettling year for equities, as I noted in my second data post, it was an even more tumultuous year for the bond market. The rise in rates transmitted to corporate bond market rates, with a concurrent rise in default spreads exacerbating the damage to investors.

Treasury 97

Treasury Start-ups Risk Premium Equity 97

Equilest

JULY 31, 2022

What is Beta in Finance, and why is it essential for a business valuation? Are you considering evaluating a business using an excel template without understanding Beta in Finance? In Finance - the beta represents how sensitive the stock price is concerning the market price change (index). Think again!

Beta 40

Beta Business Valuation Finance Discounted Cash Flow 40

Valutico

FEBRUARY 27, 2024

The WACC represents the overall cost of financing a company’s operations and is used to discount future cash flows to their present value. It represents the cost a company incurs to access funds through debt financing. It is the cost a company incurs for using equity capital to finance its operations and growth.

Discounted Cash Flow 52

Discounted Cash Flow Risk Premium Risk-free Rate Weighted Average Cost of Capital 52

Andrew Stolz

AUGUST 5, 2020

It helps an investor understand what to expect to earn in relation to the risk-free rate and the market return. CAPM assumes that the minimum a rational investor would earn is the risk-free rate by buying the risk-free asset. Investments are exposed to two types of risk: systematic and unsystematic. E(r) = Rf + ??(Rm

Risk-free Rate 52

Risk-free Rate Beta Weighted Average Cost of Capital Risk Premium 52

ThomsonReuters

MAY 6, 2021

The cash flows from an entire business include inflows and outflows from investing, financing, and operating activities (such as sales, collections on receivables, expenditures, and settling accounts payable). An entity may draw from its own experience as well as that of its peers, industry, geography, market, or other pertinent source.

Discounted Cash Flow 52

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

Equilest

JANUARY 3, 2023

This theory is based on the idea that several factors, including economic and market conditions, determine a stock's price. The APT is a multi-factor model that seeks to explain the behavior of stock prices based on various economic and market conditions. First, we need to estimate the factor loadings for each risk factor.

Risk Premium 40

Risk Premium Risk-free Rate Market Risk Finance 40

Andrew Stolz

AUGUST 6, 2020

The return on assets is determined by systematic factors such as changes in inflation , risk premiums, interest rates, etc. Investors construct portfolios with unsystematic risks, which are well-diversified to reduce total portfolio risk. In theory, arbitrage provides investors with a high chance of success. 1 + RP1 + ??2+

Risk-free Rate 52

Risk-free Rate Risk Premium Beta Marketability 52

Musings on Markets

JANUARY 6, 2023

Counter made-up numbers : It remains true that people (analysts, market experts, politicians) often make assertions based upon either incomplete or flawed data, or no data at all. Check rules of thumb : Investing and corporate finance are full of rules of thumb, many of long standing.

Risk Premium 52

Risk Premium Dividends Start-ups EBITDA 52

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. In fact, treasury bill rates consistently rise ahead of the Fed's actions over the two years.

Treasury 52

Treasury Risk Premium Start-ups Risk-free Rate 52

Musings on Markets

JANUARY 9, 2021

I spent the first week of 2021 in the same way that I have spent the first week of every year since 1995, collecting data on publicly traded companies and analyzing how they navigated the cross currents of the prior year, both in operating and market value terms.

Risk Premium 52

Risk Premium Market Capitalization Equity Start-ups 52

Musings on Markets

NOVEMBER 9, 2021

I have been writing about, and valuing, Tesla for most of its lifetime in public markets, and while it remains a company that draws strong reactions, it is also one that I truly enjoy valuing. Tesla: The Back Story I first valued Tesla in 2013 , as a "luxury automobile company" and I have valued almost every year since.

Start-ups 101

Start-ups Dividends Marketability Market Capitalization 101

Valutico

DECEMBER 12, 2023

New Emerging Market Data (From EMIS): What? We’ve integrated new emerging market transaction data from EMIS, a significant enhancement covered by major news outlets like Yahoo Finance and Asia One. New and existing customers can reach out to upgrade and access this valuable data that opens doors to critical insights.

Risk-free Rate 52

Risk-free Rate Risk Premium Market Risk Marketability 52

Musings on Markets

JANUARY 12, 2021

Corporate Finance : Corporate finance is the development of the first financial principles that govern how to run a business. It is that mission that makes corporate finance the ultimate big picture class, one that everyone (entrepreneurs, investors, analysts, business observers) should take. That tells me three things.

Corporate Finance 52

Corporate Finance Start-ups Finance Marketability 52

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 82

Equity Book Value Start-ups Corporate Finance 82

Simply Treasury

AUGUST 2, 2022

The idea is not new to encourage companies to increase their capitalization and reduce their bank debt (partly through more recourse to the capital market - CMU project). The rate would be calculated based on a 10-year "risk-free interest" rate depending on the currency, increased by a 1% risk premium (1.5%

Equity 52

Equity Risk Premium Banking Finance 52

Valutico

FEBRUARY 13, 2025

In the world of finance and investing, the concept of beta plays a vital role in assessing an investment’s risk and volatility. Whether you’re a seasoned investor or new to the market, understanding beta can empower you to make informed decisions. A beta of 1 means the asset moves in line with the market.

Beta 52

Beta Covariance Risk-free Rate Specific Risk 52

Valutico

AUGUST 10, 2023

Valuing a small and medium-sized enterprise (SME) requires a judicious blend of financial analysis, market understanding, and strategic foresight. Valuation Methods: The Asset-based, Income, and Market Approaches are the primary methodologies for SME valuation, each offering different insights into the company’s worth.

Discounted Cash Flow 52

Discounted Cash Flow Asset-based Approach Intangible Assets Business Valuation 52

Appraiser Newsroom

JUNE 4, 2024

Kevin holds an MBA in finance from Georgia State University and a Bachelors in Chemical Engineering from the Georgia Institute of Technology. Finance Professor | Pepperdine Graziadio Business School Craig R. Everett is a finance professor at the Pepperdine Graziadio Business School. a Software as a Service company.

Business Valuation 59

Business Valuation Intangible Assets Appraisal Finance 59

Valutico

SEPTEMBER 13, 2023

Recognized as firms with under 250 employees, their accurate valuation is highly important for many finance professionals. Valuing a Small and Medium-sized Enterprise (SME) involves assessing the company’s financial performance, assets, market position, and growth potential. Discounted Cash Flow analysis), Market Approach (e.g.

Discounted Cash Flow 52

Discounted Cash Flow Comparable Company Analysis Asset-based Approach Intangible Assets 52

Equilest

JULY 10, 2023

By considering the company's assets, financial performance, market conditions, and industry trends, you can make informed investment decisions and negotiate deals more effectively. Analyzing Market Conditions and Industry Trends The diversified real estate activities industry is influenced by market conditions and industry trends.

Business Valuation 40

Business Valuation Asset-based Approach Risk Premium Price to Earnings 40

Equilest

JULY 10, 2023

A comprehensive guide on valuing a business in the real estate operating companies industry, including key steps, financial analysis, and valuation methods Valuing a business in the real estate operating companies industry requires a comprehensive understanding of the company's assets, financial performance, market conditions, and industry trends.

Business Valuation 40

Business Valuation Asset-based Approach Risk Premium Price to Earnings 40

Equilest

JULY 10, 2023

By considering the business's assets, financial performance, market conditions, and future prospects, you can make informed investment decisions and negotiate deals more effectively. Analyzing the Market and Location The real estate development industry heavily relies on market conditions and location.

Business Valuation 40

Business Valuation Risk Premium Marketability Finance 40

Equilest

MARCH 17, 2022

They give a vision of the company, which must be supplemented by other approaches to address the "true" price, which will result from the negotiation, i.e., the amount accepted by the assignor and financed by the buyer. . . Thus two companies with the same level of results but different future performance risks will have different values.

Business Valuation 40

Business Valuation EBIT Discounted Cash Flow EBITDA 40

Musings on Markets

JANUARY 27, 2021

In my last post , I described the wild ride that the price of risk took in 2020, with equity risk premiums and default spreads initially sky rocketing, as the virus led to global economic shutdowns, and then just as abruptly dropping back to pre-crisis levels over the course of the year. against developed market currencies.

Start-ups 52

Start-ups Marketability Equity Treasury 52

Musings on Markets

JANUARY 28, 2024

In my last data updates for this year, I looked first at how equity markets rebounded in 2023 , driven by a stronger-than-expected economy and inflation coming down, and then at how interest rates mirrored this rebound. What is risk?

Risk Premium 121

Risk Premium Beta Start-ups Equity 121

Musings on Markets

JULY 1, 2022

As inflation has taken center stage, markets have gone into retreat globally, and across asset classes. In 2022, as bond rates have risen, stock prices have fallen, and crypto has imploded, even true believers are questioning what the bottom for markets might be, and when we will get there.

Marketability 99

Marketability Risk Premium Start-ups Equity 99