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. Historical Context In my earlier post, I noted that US equity market performance in 2022 made it the seventh worst year in stock market history, if you go back to 1928.

Treasury 77

Treasury Start-ups Risk Premium Equity 77

Musings on Markets

MARCH 19, 2022

In this section, I will begin by looking at the bond market effects and then move on to equities and other asset classes, starting by looking at the localized reaction (for Ukranian and Russian securities) and then the global ripple effects. As Russian equities have imploded, the ripple effects again are being felt across the globe.

Start-ups 100

Start-ups Risk Premium Equity Market Capitalization 100

Musings on Markets

FEBRUARY 16, 2024

In some cases, a change in regulatory or tax law can put the business model for a company or many company at risk. I confess that the line between whether nature or man is to blame for some catastrophes is a gray one and to illustrate, consider the COVID crisis in 2020. 4 & 5 Uninsurable Risk.

Risk Premium 74

Risk Premium Start-ups Beta Marketability 74

Musings on Markets

NOVEMBER 9, 2021

My two most recent valuations were in June 2019 and January 2020, and I am going to go back to them, not just because they are recent, but because they led to investment decisions on my part. Between June 2019 and January 2020, the stock went on a tear, as the stock price more than tripled, and I revisited my Tesla valuation.

Start-ups 99

Start-ups Dividends Marketability Market Capitalization 99

Musings on Markets

JANUARY 19, 2022

If equity markets surprised us with their resilience in 2020, not just weathering a pandemic for the ages, but prospering in its midst, US equity markets, in particular, managed to find light even in the darkest news stories, and continued their rise through 2021. The year that was.

Risk Premium 82

Risk Premium Risk-free Rate Start-ups Equity 82

Musings on Markets

JANUARY 27, 2022

Corporate Bonds: No Shortage of Risk Capital In my last post, I chronicled the movement in the equity risk premium, i.e. the price of risk in the equity market, during 2021, but the bond market has its own, and more measurable, price of risk in the form of corporate default spreads.

Risk-free Rate 87

Risk-free Rate Treasury Price to Book Start-ups 87

Musings on Markets

MAY 24, 2021

Looking at US equities, the S&P 500 is up about 11% and the NASDAQ about 5%, from start of the year levels, and the underperformance of the latter has led to a wave of stories about whether this is start of the long awaited comeback of value stocks, after a decade of lagging growth stocks.

Treasury 55

Treasury Start-ups Risk Premium Price to Book 55

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.

Start-ups 52

Start-ups Marketability Equity Treasury 52

Musings on Markets

JANUARY 26, 2023

Tesla's rise is summarized in the graph below, where we look at the company's revenues and earnings over time, with earnings measured in gross and operating terms, and EBITDA capturing operating cash flows: 2022 numbers updated to reflect 4th quarter earnings call on 1/25/23 Between 2010 and 2020, Tesla grew revenues from $117 million to $31.5

Start-ups 83

Start-ups Marketability Risk Premium Equity 83

Musings on Markets

JANUARY 9, 2021

The second was that, starting mid-year in 2020, equity markets and the real economy moved in different directions, with the former rising on the expectations a post-virus future, and the latter languishing, as most of the world continued to operate with significant constraints.

Risk Premium 52

Risk Premium Market Capitalization Equity Start-ups 52

Musings on Markets

JANUARY 5, 2024

Beta & Risk 1. Return on Equity 1. Equity Risk Premiums 2. Costs of equity & capital 4. Valuation Pricing Growth & Reinvestment Profitability Risk Multiple s 1. Valuation Pricing Growth & Reinvestment Profitability Risk Multiple s 1. Costs of equity & capital 1.

Dividends 100

Dividends Risk Premium Equity Book Value 100

Musings on Markets

JULY 22, 2021

Revenues did drop in 2020, as COVID restrictions put a crimp on the restaurant business, but the quarterly data suggests that business is coming back. Uber's ownership in Zomato is a result of Zomato's acquisition of Uber Eats India, where Uber received a share of Zomato's equity in exchange.

Marketability 89

Marketability Start-ups Equity Price to Book 89

Musings on Markets

JANUARY 12, 2021

I also offer online classes in basic finance (present value, risk models and measures) and accounting (or at least my version of it) as background to my main classes. 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 8, 2022

Those measures took a beating in 2020, as COVID decimated the earnings of companies in many sectors and regions of the world, and while 2021 was a return to some degree of normalcy, there is still damage that has to be worked through.

Risk Premium 93

Risk Premium Start-ups Market Capitalization Corporate Finance 93

Musings on Markets

FEBRUARY 10, 2021

Cost of raising funds (capital) : Since the funds that are invested by a business come from equity investors and lenders, one way in which the hurdle rate is computed is by looking at how much it costs the investing company to raise those funds. But what if the company is looking at a project in Nigeria or Bangladesh? as mature markets.

Risk-free Rate 52

Risk-free Rate Risk Premium Start-ups Equity 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 78

Equity Book Value Start-ups Corporate Finance 78

Musings on Markets

FEBRUARY 27, 2023

To fund the business, you can either use borrowed money (debt) or owner's funds (equity), and while both are sources of capital, they represent different claims on the business. Even government-owned businesses fall under its umbrella, with the key difference being that equity is provided by the taxpayers.

Equity 52

Equity EBITDA Start-ups Net Debt 52

Appraiser Newsroom

JUNE 4, 2024

In 2020, in full recognition of his outstanding services in the Society and contributions to the appraisal profession, the American Society of Appraisers gave him their Lifetime Achievement Award. He was a on the Board of Trustees of the International Valuation Standards Council finishing his second term in 2023. Tax Valuation Services.

Business Valuation 59

Business Valuation Intangible Assets Appraisal Finance 59

Musings on Markets

MAY 11, 2021

At first sight, stocks have had an impressive run over much of the last century, delivering substantial return premiums over treasury bonds, treasury bills and corporate bonds: Historical returns on stocks, bonds and bills: 1928 -2020 These returns, though, are prior to personal taxes, and the tax bite can be substantial.

Dividends 52

Dividends Start-ups Risk Premium Treasury 52