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.

Treasury 97

Treasury Start-ups Risk Premium Equity 97

Musings on Markets

FEBRUARY 8, 2022

Coca Cola, notwithstanding having its headquarters in Atlanta, has exposure to risk in multiple emerging markets, and its equity risk premium should reflect this exposure. Debt, Default Risk and Hurdle Rates Almost all of the discussion so far has been about equity funding and its costs, but companies do raise funds from debt.

Risk Premium 95

Risk Premium Beta Start-ups Equity 95

Musings on Markets

MAY 6, 2022

It is precisely because we have been spoiled by a decade of low and stable inflation that the inflation numbers in 2021 and 2022 came as such a surprise to economists, investors and even the Fed. Note that in all three cases, it is not the Fed that is driving rates, but what is happening to inflation.

Risk Premium 102

Risk Premium Treasury Start-ups Equity 102

Musings on Markets

NOVEMBER 9, 2021

In 2021, looking at the company, I feel more convinced than I was a few years that it is, at its core, an automobile company, and while it will continue to derive revenues from batteries and perhaps even software, its pathway to becoming a trillion dollar market cap company still runs through the "car company" story.

Start-ups 101

Start-ups Dividends Marketability Market Capitalization 101

Musings on Markets

JANUARY 5, 2024

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

Dividends 105

Dividends Risk Premium Equity Book Value 105

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. In this section, I will begin by looking at the evolution of my Tesla value from 2013 to 2021, and then present my updated valuation of the company.

Start-ups 99

Start-ups Marketability Risk Premium Equity 99

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

As of 2021, Idemitsu has a cash-to-assets ratio of 3%. Its net-debt to equity ratio stood at 0.9x Historically, Japan has a very low risk-free rate. The Japanese gov’t announced to release some of its oil reserve to prevent a further spike in price. Balance sheet – Idemitsu Kosan. Ratios – Idemitsu Kosan.

Dividends 52

Dividends Risk-free Rate Net Debt Equity 52

Musings on Markets

FEBRUARY 15, 2023

The first is to see how the increase in inflation in 2021 and 2021 has played out in profitability for companies, since inflation can increase profits for some firms, and lower them for others. It was in attempting to estimate the latter that I computed the costs of equity in my second post and costs of capital in my third.

Start-ups 52

Start-ups Equity Risk Premium Risk-free Rate 52

Musings on Markets

FEBRUARY 2, 2023

A few of you did take issue with the fact that the growth rate that I used for the first five years dropped from 35%, in my November 2021 valuation , to 24%, in my most recent one. There is not much room to maneuver on either number, since half of all US companies have costs of capital between 7.3%

Start-ups 99

Start-ups Risk-free Rate Market Capitalization Marketability 99

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. The graph below contrasts the expected inflation rates from the Michigan survey with the expected inflation rate from the treasury markets. Louis estimates for inflation rates exceeding 2.5%

Treasury 55

Treasury Start-ups Risk Premium Price to Book 55

Musings on Markets

JANUARY 12, 2021

pm (New York time) All three classes start on February 1, 2021 and end on May 10, 2021. Discount rates in intrinsic valaution have to change to reflect current market conditions, and can be expected to change over time. The class times for the coming semester are below: Corporate Finance: Mondays & Wednesdays, 12.30

Corporate Finance 52

Corporate Finance Start-ups Finance Marketability 52

Musings on Markets

JANUARY 19, 2022

Leading into 2021, the big questions facing investors were about how quickly economies would recover from COVID, with the assumption that the virus would fade during the year, and the pressures that the resulting growth would put on inflation. The year that was.

Risk Premium 99

Risk Premium Risk-free Rate Start-ups Equity 99

Musings on Markets

MARCH 25, 2021

The first quarter of 2021 has been, for the most part, a good time for equity markets, but there have been surprises. The first has been the steep rise in treasury rates in the last twelve weeks, as investors reassess expected economic growth over the rest of the year and worry about inflation. for 2021 and inflation of 2.2%

Equity 52

Equity Risk-free Rate Treasury Start-ups 52

Musings on Markets

JULY 27, 2022

On July 21, 2021, I valued Zomato just ahead of its initial public offering at about ? 169 per share in late 2021. per share, and the mood and momentum that worked in its favor for most of 2021 had turned against the company. grow at the cost of equity), yielding about ?46 15,000 in March 2021 to ? 41 per share.

Risk Premium 98

Risk Premium Start-ups Equity Marketability 98

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

JULY 25, 2023

Just to illustrate the contradictions that can result, PRS gives Libya a country risk score that is higher (safer) than the scores it gives United States or France, putting them at odds with most other services that rank Libya among the riskiest countries in the world.

Risk Premium 52

Risk Premium Equity Start-ups Risk-free Rate 52

Musings on Markets

JANUARY 28, 2025

The Drivers of Interest Rates Over the last two decades, for better or worse, we (as investors, consumers and even economics) seem to have come to accept as a truism the notion that central banks set interest rates. Note that high yield issuances which spiked in 2020 and 2021, peak greed years, almost disappeared in 2022.

Banking 69

Banking Treasury Risk Premium Start-ups 69