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. Stocks: The What Next?

Equity 93

Equity Risk Premium Start-ups Dividends 93

Andrew Stolz

JANUARY 28, 2022

Idemitsu Kosan’s revenue breakdown 2020. Historically, Japan has a very low risk-free rate. Ramp-up of CAPEX necessary to ensure longevity. Attractive dividend yield could rise to 2x Japanese average. Download the full report as a PDF. Price and volume remain bullish. The share price is up 33% YTD.

Dividends 52

Dividends Risk-free Rate Net Debt Equity 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 98

Start-ups Marketability Risk Premium Equity 98

Musings on Markets

SEPTEMBER 20, 2024

The first is the spike in the Fed Funds rate to more than 20% between 1979 and 1982, when Paul Volcker was Fed Chair, and represented his attempt to break the cycle of high inflation that had entrapped the US economy.

Banking 122

Banking Treasury Start-ups Marketability 122

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 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). The year that was.

Risk Premium 98

Risk Premium Risk-free Rate Start-ups Equity 98

Musings on Markets

FEBRUARY 10, 2021

Going back to the start of this section, a company (say Ford) would require a higher cost of equity for a Nigerian project than for an equivalent German project (using a US $ risk free rate of 1% and a beta of 1.1 Cost of equity in US $ for German project = 1% + 1.1

Risk-free Rate 52

Risk-free Rate Risk Premium Start-ups Equity 52

Musings on Markets

MAY 24, 2021

As the economy climbs back from the shutdown in 2020, there are some who argue that the monetary and fiscal stimuli of the last year, unprecedented though they may be in size and scale, will not cause inflation because the economy has substantial excess capacity. Louis estimates for inflation rates exceeding 2.5%

Treasury 55

Treasury Start-ups Risk Premium Price to Book 55

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 80

Equity Book Value Start-ups Corporate Finance 80

Andrew Stolz

JANUARY 28, 2022

Gazprom’s revenue breakdown 2020. Russia has a massively high risk-free rate of 10%. Highlights: Bright future of natural gas as a transition fuel. If Europe holds back Gazprom expansion, pivot to Asia. Domestic market still not fully penetrated yet. Download the full report as a PDF. The share price is up 35% YTD.

Risk-free Rate 52

Risk-free Rate Net Debt Start-ups 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 99

Risk Premium Start-ups Market Capitalization Corporate Finance 99

Musings on Markets

JANUARY 5, 2024

That said, there are some of you who are not doing your analysis in real time, either because you are in the appraisal business and must value your company as of the start of 2020 or 2021, or a researcher looking at changes over time. will reflect the most recent quarterly accounting filing.

Dividends 105

Dividends Risk Premium Equity Book Value 105

Musings on Markets

JANUARY 28, 2025

While it is true that the Fed became more active (in terms of bond buying, in their quantitative easing phase) in the bond market in the last decade, the low treasury rates between 2009 and 2020 were driven primarily by low inflation and anemic real growt h. Data Update 4 for 2025: Interest Rates, Inflation and Central Banks!

Banking 69

Banking Treasury Risk Premium Start-ups 69