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Good (Bad) Banks and Good (Bad) Investments: At the right price.

Musings on Markets

Consequently, you can only value the equity in a bank, and by extension, the only pricing multiples you can use to price banks are equity multiples (PE, Price to Book etc.).

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A Follow up on Inflation: The Disparate Effects on Company Values!

Musings on Markets

Historical Data: 1930-2019 To see how this framework works in practice, let's start by looking at the performance of US stocks, across the decades, and look at the returns on stocks, broadly categorized based on market capitalization and price to book ratios.

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Russia in Ukraine: Let Loose the Dogs of War!

Musings on Markets

The table below summarizes the market cap change, by region of the world: It is no surprise that Eastern Europe and Russia, which are in the eye of the hurricane, have seen the most damage to equities, but other than the Middle East, every other equity market in the world is down, with the US, EU and China shedding significant market capitalization.

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Data Update 3: Inflation and its Ripple Effects!

Musings on Markets

I also looked at how inflation plays out on equity sub-groupings, on two dimensions, the first being market capitalization and the second being price to book, with the former becoming a stand-in for the vaunted small cap premium and the latter for the value versus growth question.

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Data Update 1 for 2021: A (Data) Look Back at a Most Forgettable Year (2020)!

Musings on Markets

Consider, for instance, an investor who picks stocks based upon price to book ratios, who finds a stock trading at a price to book ratio of 1.5. While some of the companies in this data trace their existence back decades, there is a healthy proportion of younger companies, many in emerging markets and new industries.

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Interest Rates, Earning Growth and Equity Value: Investment Implications

Musings on Markets

Interest Rates and Value As interest rates have risen, the discussion in markets has turned ito the effects that these rates will have on stock prices. In January, the NASDAQ continued its 2020 success, and the S&P 500 lagged, losing value. In February and March, the tide shifted, and the S&P 500 outperformed the NASDAQ.

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

Musings on Markets

To the extent that some of that risk capital is coming back into the markets, equity markets have benefited, with benefits skewing more towards the companies and markets that were punished the most in 2022. trillion) to market capitalizations, regaining almost half of the value lost in last year's rout.