Musings on Markets

FEBRUARY 15, 2023

Some of that variation can be attributed to different mixes of businesses in different regions, since unit economics will result in higher gross margins for technology companies and commodity companies, in years when commodity prices are high, and lower gross margins for heavy manufacturing and retail businesses.

Start-ups 52

Start-ups Equity Risk Premium Risk-free Rate 52

Musings on Markets

MAY 24, 2021

There are a few arguing that the shift to a technology-based economy has removed inflationary pressures permanently, pointing to the last decade where inflation fears never came to fruition. If inflation is higher than expected, you can expect interest rates to rise, pushing up the returns that both equity investors and lenders demand.

Treasury 55

Treasury Start-ups Risk Premium Price to Book 55

Musings on Markets

JANUARY 12, 2021

The last decade, with it influx of user based companies and technology platforms forced me to think seriously about how to value a user, subscriber or rider and extrapolate from there to company value. Discount rates in intrinsic valaution have to change to reflect current market conditions, and can be expected to change over time.

Corporate Finance 52

Corporate Finance Start-ups Finance Marketability 52

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 99

Risk Premium Risk-free Rate Start-ups Equity 99

Musings on Markets

JANUARY 28, 2024

I use the data through the end of 2023 to compute all three measures for every company, and in my first breakdown, I look at these risk measures, by sector (globally): Utilities are the safest or close to the safest , on all three price-based measures, but there are divergences on the other risk measures.

Risk Premium 121

Risk Premium Beta Start-ups Equity 121

Musings on Markets

JANUARY 8, 2022

Risk Premiums : You cannot make informed financial decisions, without having measures of the price of risk in markets, and I report my estimates for these values for both debt and equity markets. I extend my equity risk premium approach to cover other countries, using sovereign default spreads as my starting point, at this link.

Risk Premium 99

Risk Premium Start-ups Market Capitalization Corporate Finance 99

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 52

Equity Risk-free Rate Treasury Start-ups 52

Equidam

MAY 14, 2025

Categorisation poses a significant challenge in startup valuation, with investors and founders frequently mixing up markets, business models, industries, and underlying technologies. This helps investors align their expectations and strategies with the sector-specific funding dynamics, comparative growth rates, and broader investor sentiment.

Risk Premium 64

Risk Premium Risk-free Rate Beta Market Risk 64

Equidam

APRIL 22, 2025

.” De-Risking the Future: The Role of Current Traction, Team, and Milestones If valuation is about the future, what role does the present play? While not a reward for the past, a startup’s current state its traction, team, technology, and milestones is critically important. [4] This de-risks the product/technology aspect.

Discounted Cash Flow 52

Discounted Cash Flow Marketability Risk Premium Start-ups 52

Equidam

APRIL 22, 2025

10] , [23] , [2] Discount Rate: The rate used to discount future cash flows is typically the cost of equity, calculated via the Capital Asset Pricing Model (CAPM): Cost of Equity = Risk-Free Rate + Beta * Market Risk Premium. [23] 23] Risk-Free Rate: Tied to government bond yields (e.g.,

Discounted Cash Flow 64

Discounted Cash Flow Terminal Value Marketability EBITDA 64