Musings on Markets

FEBRUARY 8, 2025

In the first five posts, I have looked at the macro numbers that drive global markets, from interest rates to risk premiums, but it is not my preferred habitat. In this role, the cost of capital is an opportunity cost, measuring returns you can earn on investments on equivalent risk.

Risk Premium 72

Risk Premium Beta Start-ups Equity 72

Musings on Markets

APRIL 7, 2025

Not surprisingly, the markets opened down on Thursday and spent the next two days in that mode, with US equity indices declining almost 10% by close of trading on Friday. US equities had the biggest decline in dollar value terms, losing $5.3 trillion in value last week, a 9.24% decline in value from the Friday close on March 28, 2025.

Marketability 98

Marketability Risk Premium Start-ups Equity 98

Musings on Markets

JANUARY 28, 2025

Entering 2025, the gap between intrinsic and treasury rates has narrowed , as the market consensus settles in on expectations that inflation will stay about the Fed-targeted 2% and that economic activity will be boosted by tax cuts and a business-friendly administration.

Banking 69

Banking Treasury Risk Premium Start-ups 69

Musings on Markets

FEBRUARY 18, 2025

While I was working on my last two data updates for 2025, I got sidetracked, as I am wont to do, by two events. With these characteristics, the accounting balance sheets for these companies will be identical right after they start up, and the book value of equity will be $60 million in each company.

Equity 52

Equity Book Value Marketability Start-ups 52

Musings on Markets

APRIL 20, 2025

For the market, it is often built on papers (or books) that look at the historical data on what equity markets have delivered as returns over long periods, relative to what you would have made investing elsewhere. Contrarian Investing: The Psychological Tests! In the abstract, it is easy to understand the appeal of contrarian investing.

Start-ups 133

Start-ups Price to Book Marketability Equity 133

Musings on Markets

JANUARY 31, 2025

I graph the performance of the five AI stocks highlighted in the earlier section, throwing in the Meta and Microsoft for good measure, on a daily basis in 2025. YouTube Video Nvidia Valuations Nvidia valuation in September 2024 (Pre DeepSeek) Nvidia valuation in January 2025 (Post DeepSeek)

Start-ups 133

Start-ups Marketability Technology Risk Premium 133

Reynolds Holding

MARCH 25, 2025

17] See [link] (showing the United States has among the lowest equity risk premiums in the world); Luzi Hail and Christian Leuz, International Differences in the Cost of Equity Capital: Do Legal Institutions and Securities Regulation Matter?, 11, 2025). [20] 12, 2025). [21] 12, 2025). [22]

Corporate Finance 45

Corporate Finance Finance Banking Marketability 45

Reynolds Holding

FEBRUARY 23, 2025

Strong empirical evidence shows the United States has a lower cost of equity capital than comparable countries and that this lower cost is attributable in part to an institutional design that protects the independence of securities regulators and assures strong enforcement. In the United States, the cost of capital is lower than elsewhere.

Systematic Risk 45

Systematic Risk Marketability Equity Risk Premium 45

Musings on Markets

FEBRUARY 23, 2025

The Debt Trade off As a prelude to examining the debt and equity tradeoff, it is best to first nail down what distinguishes the two sources of capital. To me, the key distinction between debt and equity lies in the nature of the claims that its holders have on cash flows from the business.

Equity 75

Equity EBITDA Risk Premium Gross Debt 75

Musings on Markets

FEBRUARY 6, 2025

The results, broken down broadly by geography are in the table below: As you can see, the aggregate market cap globally was up 12.17%, but much of that was the result of a strong US equity market. That process of risk analysis and estimating risk premiums starts by understanding why some countries are riskier than others.

Risk Premium 67

Risk Premium Start-ups Enterprise Value Equity 67

Musings on Markets

MARCH 15, 2025

Thus, my estimates of equity risk premiums, updated every month, are not designed to make big statements about markets but more to get inputs I need to value companies. That said, to value companies today, I have no choice but to bring in the economics and politics of the world that these companies inhabit.

Start-ups 130

Start-ups Risk Premium Marketability Equity 130

Global Finance

OCTOBER 29, 2024

We’ve seen dramatic improvements with companies addressing maturities due in 2025, but also a lot of progress on maturities due out to 2026. The risk looks a lot better, and all those reasons support the soft-landing thesis. There are certain sectors that we think are offering better risk/reward.

Start-ups 98

Start-ups Finance Equity Private Equity Firm 98