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

JULY 17, 2023

I am not a market prognosticator for a simple reason. I am just not good at it, and the first six months of 2023 illustrate why market timing is often the impossible dream, something that every investor aspires to be successful at, but very few succeed on a consistent basis.

Marketability 98

Marketability Risk Premium Start-ups Treasury 98

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. Our paper contributes to the discussion by examining fraud allegations, thus not restricting our investigation based on the eventual case outcome.

Risk Premium 189

Risk Premium Corporate Finance Marketability Finance 189

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. The second set of inputs are prices of risk, in both the equity and debt markets, with the former measured by equity risk premiums , and the latter by default spreads.

Risk Premium 75

Risk Premium Beta Start-ups Equity 75

Musings on Markets

SEPTEMBER 27, 2022

By the start of 2022, the window for early action had closed and for much of this year, inflation has been the elephant in the room, driving markets and forcing central banks to be reactive, and its presence has already induced me to write three posts on its impact.

Risk Premium 99

Risk Premium Treasury Start-ups Equity 99

Musings on Markets

FEBRUARY 11, 2023

In this section, I will begin measures of country default risk, including sovereign ratings and CDS spreads, before moving to more expansive measures of country risk before concluding with measures of equity risk premiums for countries, a pre-requisite for estimating the values of companies with operations in those countries.

Risk Premium 97

Risk Premium Start-ups Equity Marketability 97

Musings on Markets

JANUARY 17, 2024

That positive result notwithstanding, the recovery was uneven, with a big chunk of the increase in market capitalization coming from seven companies (Facebook, Amazon, Apple, Microsoft, Alphabet, NVidia and Tesla) and wide divergences in performance across stocks, in performance. increase in market capitalization.

Risk Premium 82

Risk Premium Start-ups Equity Dividends 82

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.

Risk Premium 93

Risk Premium Beta Start-ups Equity 93

Musings on Markets

FEBRUARY 18, 2025

The second was a comment that I made on a LinkedIn post that had built on my implied equity premium approach to the Indian market but had run into a roadblock because of an assumption that, in an efficient market, the return on equity would equate to the cost of equity.

Equity 52

Equity Book Value Marketability Start-ups 52

Musings on Markets

MAY 6, 2022

The nature of markets is that they are never quite settled, as investors recalibrate expectations constantly and reset prices. Clearly, we are not in one of those time periods, as markets approach bipolar territory, with big moves up and down.

Risk Premium 103

Risk Premium Treasury Start-ups Equity 103

BV Specialists

AUGUST 12, 2024

That being said, the particular types of property being appraised, along with the markets and industries in which they operate, will dictate their own set of variables that will influence value under these fixed approaches and methodologies. The useful life and effective age of a particular asset will also affect its value.

Risk Premium 96

Risk Premium Appraisal Business Valuation Marketability 96

Musings on Markets

JANUARY 20, 2021

Investors are constantly in search of a single metric that will tell them whether a market is under or over valued, and consequently whether they should buying or selling holdings in that market. Note that nothing that I have said so far is premised on modern portfolio theory, or any academic view of risk premiums.

Risk Premium 52

Risk Premium Risk-free Rate Equity Dividends 52

Musings on Markets

JULY 22, 2021

Zomato, an Indian online food-delivery company, was opened up to public market investors on July 14, 2021, and its market debut is being watched for clues by a number of other online ventures in India, waiting in the wings to go public.

Marketability 99

Marketability Start-ups Equity Price to Book 99

Peak Business Valuation

NOVEMBER 24, 2024

An HVAC valuation shows the business’s financial status and determines the HVAC company’s fair market value. When determining how to value an HVAC business for litigation, Peak looks at the market , income , and asset approaches. Below we discuss how to value an HVAC company primarily using the market and income approaches.

Business Valuation 52

Business Valuation Fair Market Value Appraisal Discounted Cash Flow 52

Musings on Markets

AUGUST 15, 2023

Expected returns for Risky Investments : The risk-free rate becomes the base on which you build to estimate expected returns on all other investments. For instance, if you read my last post on equity risk premiums , I described the equity risk premium as the additional return you would demand, over and above the risk free rate.

Risk-free Rate 98

Risk-free Rate Risk Premium Treasury Start-ups 98

Musings on Markets

JANUARY 5, 2024

Thus, looking at only the companies in the S&P 500 may give you more reliable data, with fewer missing observations, but your results will reflect what large market cap companies in any sector or industry do, rather than what is typical for that industry.

Dividends 107

Dividends Risk Premium Equity Book Value 107

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. in 2022, higher than the 1- 1.5%

Treasury 97

Treasury Start-ups Risk Premium Equity 97

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

Equidam

APRIL 26, 2025

This approach encourages dialogue focused on the business fundamentals the team, the market opportunity, the product, the financial projections rather than anchoring the conversation to arbitrary figures potentially derived from selectively chosen, and often inappropriate, market comparisons.

Discounted Cash Flow 59

Discounted Cash Flow Terminal Value Book Value Beta 59

Valutico

FEBRUARY 27, 2024

The formula for WACC is: WACC = (E/V x Re) + ((D/V x Rd) x (1-T)) E = market value of equity D = market value of debt V = total market value of the firm’s equity and debt Re = cost of equity Rd = cost of debt T = tax rate Check out more insights on the concept of WACC here.

Discounted Cash Flow 52

Discounted Cash Flow Risk Premium Risk-free Rate Beta 52

ThomsonReuters

MAY 6, 2021

An entity may draw from its own experience as well as that of its peers, industry, geography, market, or other pertinent source. The adjustment added to the risk-free rate to arrive at the risk-adjusted rate is often referred to as the “risk premium.” Understanding the Calculation and the Output.

Discounted Cash Flow 52

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

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

Equilest

JANUARY 7, 2025

A wide range of techniques, such as the asset-based strategy, market approach, and income approach, have been employed by analysts. For example, the market technique compares the company to similar enterprises that have previously been sold, whereas the income approach may involve determining the present value of future cash flows.

Business Valuation 40

Business Valuation Risk Premium Finance Start-ups 40

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

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

FEBRUARY 10, 2021

Capital Constrained Clearing Rate : The notion that any investment that earns more than what other investments of equivalent risk are delivering is a good one, but it is built on the presumption that businesses have the capital to take all good investments. US , Europe , Emerging Markets , Japan , Australia/NZ & Canada , Global ) 2.

Risk-free Rate 52

Risk-free Rate Risk Premium Start-ups Equity 52

Musings on Markets

JANUARY 27, 2022

By the end of 2021, it was clear that this bout of inflation was not as transient a phenomenon as some had made it out to be, and the big question leading in 2022, for investors and markets, is how inflation will play out during the year, and beyond, and the consequences for stocks, bonds and currencies.

Risk-free Rate 99

Risk-free Rate Treasury Price to Book Start-ups 99

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. Data universe : In my sample, I include all publicly traded firms with market capitalizations that exceed zero, traded anywhere in the world.

Risk Premium 52

Risk Premium Dividends Start-ups EBITDA 52

Reynolds Holding

OCTOBER 22, 2024

Our study also indicates that market awareness of these issues is growing, as seen in the higher risk premiums demanded by loan investors when these relationships are perceived to compromise the integrity of loan agreements.

Equity 45

Equity Risk Premium Banking Private Equity Firm 45

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

JANUARY 26, 2023

My last valuation of Tesla was in November 2021, towards its market peak, and given its steep fall from grace, in conjunction with Elon Musk's Twitter experiment, it is time for a revisit.

Start-ups 99

Start-ups Marketability Risk Premium Equity 99

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

Global Finance

MARCH 5, 2025

The main attraction of full dollarization is the elimination of the risk of a sudden, sharp devaluation of the countrys exchange rate, the IMF writers point out. This may allow the country to reduce the risk premium attached to its international borrowing. However, there are pros and cons.

Banking 59

Banking Finance Risk Premium Marketability 59

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

Equilest

APRIL 11, 2023

With limited features and formulas, it can be difficult to account for all the necessary parameters in a valuation, such as interest rates, equity risk premiums, and beta. Additionally, Excel does not have market analysis reports or all the necessary parameters to create an accurate valuation.

Business Valuation 40

Business Valuation Beta Risk Premium Discounted Cash Flow 40

Musings on Markets

MAY 24, 2021

As we approach the mid point of 2021, financial markets, for the most part, have had a good year so far. All of these measures, no matter how carefully designed, give a measure of inflation in the past, and markets are ultimately concerned more with inflation in the future.

Treasury 56

Treasury Start-ups Risk Premium Price to Book 56

Equilest

JULY 31, 2022

In Finance - the beta represents how sensitive the stock price is concerning the market price change (index). The beta measures the return of the stock relative to the market return. For example, when the stock market goes up 1%, and the stock goes up 0.5%, then the stock beta is equal to 0.5.

Beta 40

Beta Business Valuation Finance Discounted Cash Flow 40