Remove 2023 Remove Dividends Remove Risk-free Rate
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Data Update 2 for 2023: A Rocky Year for Equities!

Musings on Markets

The first is the dividends you receive, while you hold stocks, a cash flow stream that provides a measure of stability to investors who seek it. After a year of being pummeled by markets, what are investors pricing stocks to make in 2023 and beyond? Actual Returns Your returns on equities come in one of two forms.

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The Price of Risk: With Equity Risk Premiums, Caveat Emptor!

Musings on Markets

As part of that obsession, since September 2008, I have estimated an equity risk premium for the S&P 500 at the start of each month, and not only used that premium, when valuing companies during that month, but shared my estimate on my webpage and on social media. The risk premium that you demand has different names in different markets.

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Data Update 2 for 2022: US Stocks kept winning in 2021, but…

Musings on Markets

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).

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Data Update 1 for 2024: The data speaks, but what does it say?

Musings on Markets

I have also developed a practice in the last decade of spending much of January exploring what the data tells us, and does not tell us, about the investing, financing and dividend choices that companies made during the most recent year. Beta & Risk 1. Dividends and Potential Dividends (FCFE) 1. Equity Risk Premiums 2.

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Data Update 5 for 2024: Profitability - The End Game for Business?

Musings on Markets

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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Data Update 1 for 2022: It is Moneyball Time!

Musings on Markets

The consensus can be wrong : A few months ago, I made the mistake of watching Moneyheist, a show on Netflix, based upon its high audience ratings on Rotten Tomatoes , and as I wasted hours on this abysmal show, I got a reminder that crowds can be wrong, and sometimes woefully so.

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Data Update 4 for 2024: Danger and Opportunity - Bringing Risk into the Equation!

Musings on Markets

In my last data updates for this year, I looked first at how equity markets rebounded in 2023 , driven by a stronger-than-expected economy and inflation coming down, and then at how interest rates mirrored this rebound. Globally, health care has the highest percentage of money-losing companies and utilities have the lowest.