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 82

Start-ups Marketability Risk Premium Equity 82

Andrew Stolz

JANUARY 28, 2022

As of 2021, Idemitsu has a cash-to-assets ratio of 3%. 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. Low cash generation ability might result in conservative expansion plans.

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Dividends Risk-free Rate Net Debt Equity 52

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 72

Equity Risk Premium Start-ups Dividends 72

Musings on Markets

JANUARY 30, 2023

Returns in 2022 In my first classes in finance, as a student, I was taught that the US treasury rate was a risk free rate, with the logic being that since the US treasury could always print money, it would not default.

Treasury 76

Treasury Start-ups Risk Premium Equity 76

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. It was the reason that I argued at a $1.2

Start-ups 99

Start-ups Risk-free Rate Market Capitalization Risk Premium 99

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.

Risk Premium 95

Risk Premium Treasury Start-ups Equity 95

Musings on Markets

FEBRUARY 8, 2022

In my last two posts, I noted that the prices of risk have drifted down in markets, with both equity risk premiums and default spreads decreasing through 2021.

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Risk Premium Beta Start-ups Equity 69

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.

Risk Premium 82

Risk Premium Risk-free Rate Start-ups Equity 82

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. the returns you can make on investments of equivalent risk, and that game became a lot more difficult to win in 2022.

Equity 52

Equity Start-ups Risk Premium Risk-free Rate 52

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

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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%

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Treasury Start-ups Risk Premium Price to Book 55

Musings on Markets

AUGUST 15, 2023

In every introductory finance class, you begin with the notion of a risk-free investment, and the rate on that investment becomes the base on which you build, to get to expected returns on risky assets and investments. What is a risk free investment? Why does the risk-free rate matter?

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Risk-free Rate Risk Premium Treasury Start-ups 83

Musings on Markets

FEBRUARY 10, 2021

The vehicle that I use to convey country risk into hurdle rates is the equity risk premium , the price of risk in equity markets, that I talked about in my earlier post on the topic. US , Europe , Emerging Markets , Japan , Australia/NZ & Canada , Global ) 2. 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

JULY 13, 2022

lived under full democracy, in 2021, with large differences across regions. Country Risk: Currency and Cost of Capital As a final part to this post, to see the shifts in country risk that we have seen in 2022, let’s start with an assessment of risk free rates.

Risk Premium 83

Risk Premium Risk-free Rate Start-ups Equity 83

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

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.

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Dividends Risk Premium Equity Book Value 100

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.

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Equity Book Value Start-ups Corporate Finance 78

Musings on Markets

JULY 25, 2023

Your choice of currency will affect your cash flows and your discount rates, but only because each currency brings it's own expectations of inflation, with higher inflation currencies leading to higher growth rates for cash flows and higher discount rates.

Risk Premium 52

Risk Premium Equity Start-ups Risk-free Rate 52