Musings on Markets

JANUARY 24, 2024

Other Currencies The rise in interest rates that I chronicled for the United States played out in other currencies, as well. Note also that during 2022 and 2023, the movements in these government bond rates mimic the US treasuries, rising strongly in 2022 and declining or staying stable in 2023.

Treasury

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. For example, a beta of 1.5 suggests dampened price movements, around 0.8%

Beta

Brian DeChesare

MAY 3, 2023

Dividend Discount Model, Part 4: Present Value of Terminal Value and Dividends Since the Dividend Discount Model is based on Equity Value, not Enterprise Value, the Discount Rate is the Cost of Equity: Risk-Free Rate + Equity Risk Premium * Levered Beta.

Dividends

Valutico

OCTOBER 20, 2022

Rf = Risk-free Rate. Rm – Rf) = Equity Market Risk Premium. Cp = Cost of Equity Premium. Value a company’s stock price to compare it to the actual stock price, as one piece of information to help you decide whether to invest. Now, we need to calculate the discount rate. . B = Beta. (Rm

Discounted Cash Flow

Musings on Markets

JANUARY 12, 2021

In this class, I try (and that is all I can do) to provide a full menu of investment philosophies, starting with technical analysis/charting, moving on to value and growth investing (in both public and private forms), and then on trading on public or private information.

Corporate Finance

Musings on Markets

JANUARY 19, 2022

In a post at the start of 2021 , I argued that while stocks entered the year at elevated levels, especially on historic metrics (such as PE ratios), they were priced to deliver reasonable returns, relative to very low risk free rates (with the treasury bond rate at 0.93% at the start of 2021).

Risk Premium

Musings on Markets

JANUARY 28, 2024

That is understandable, but digger deeper into the data and doing more analysis will lead to better estimates, only if the risk that you are looking at is estimation risk. If you are interested, you can review the process that I use in far more detail in this paper that I update every year on country risk.

Risk Premium

Musings on Markets

JANUARY 8, 2022

In the last decade, as tech companies have expanded their reach into our personal lives, collecting information on choices and decisions that used to private, big data has become not just a buzzword, but also a justification for investing billions in companies/projects that have no discernible pathway to profitability, but offer access to data.

Risk Premium

Musings on Markets

JULY 27, 2022

The effects of inflation show up first as higher risk free rates , across currencies, and next in higher risk premiums, with both equity risk premiums and default spreads rising. As a company with the bulk of its business in India, Zomato again is more exposed to these developments.

Risk Premium

Musings on Markets

MARCH 25, 2021

for the year are at war with its concurrent promise to keep rates low; after all, adding those numbers up yields a intrinsic risk free rate of 8.7%. The Stocks Story As treasury rates have risen in 2021, equity markets have been surprisingly resilient, with stocks up during the first three months.

Equity

Musings on Markets

JANUARY 17, 2025

Computing the returns in real terms , by taking out inflation in each year from that year's returns, and recomputing the equity risk premiums: Download historical data Note that the equity risk premiums move only slightly, because inflation finds its way into both stock and treasury returns.

Equity

Equidam

MAY 14, 2025

This calibration directly impacts expected returns, required ROI, survival rates, and appropriate liquidity discounts, significantly refining risk assessment. Country: Argentina Operating from Argentina influences extrinsic risk factors due to regional economic conditions, market size, regulatory environment, and currency stability.

Risk Premium

Musings on Markets

JANUARY 28, 2025

Thus, an unexpected increase in the Fed Funds rate may signal that the Fed sees higher inflation than the market perceives at the moment, and a big drop in the Fed Funds rates may indicate that it sees the economy weakening at a time when the market may be unaware. Data Update 4 for 2025: Interest Rates, Inflation and Central Banks!

Banking

Equidam

APRIL 22, 2025

3] , [6] For the startup itself, valuation informs strategic planning, facilitates goal-setting, aids in resource allocation, and provides a benchmark for measuring progress. [3] 11] , [1] , [2] They provide a structured, reasoned opinion on value to inform the negotiation that ultimately determines the price. [18]

Discounted Cash Flow

Equidam

APRIL 22, 2025

This de-risks the market adoption aspect. Essentially, all verifiable information about the company’s present serves to build credibility and reduce the perceived risk associated with achieving the projected future state. This premium rises when perceived market risk increases. [27] 2] [15] [17].

Discounted Cash Flow