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

Musings on Markets

FEBRUARY 27, 2023

That may reflect the concern that once a person or entity starts borrowing to fund its needs, it is easy to overuse debt, and risk its wellbeing in the process. An Optimizing Tool In my second and third data posts for this year, I chronicled the effects of rising interest rates and risk premiums on costs of equity and capital.

Equity 52

Equity EBITDA Start-ups Net Debt 52

Musings on Markets

JANUARY 9, 2021

The second was that, starting mid-year in 2020, equity markets and the real economy moved in different directions, with the former rising on the expectations a post-virus future, and the latter languishing, as most of the world continued to operate with significant constraints.

Risk Premium 52

Risk Premium Market Capitalization Equity Start-ups 52

Musings on Markets

JANUARY 8, 2022

To start the year, I returned to a ritual that I have practiced for thirty years, and that is to take a look at not just market changes over the last year, but also to get measures of the financial standing and practices of companies around the world. Happy New Year, and I hope that 2022 brings you good tidings! Sometimes, less is more!

Risk Premium 99

Risk Premium Start-ups Market Capitalization Corporate Finance 99

Musings on Markets

MAY 11, 2021

In my last post, I looked at the Biden Administration's proposal to increase corporate taxes, to provide funding for an infrastructure bill, and concluded that while there is room for raising corporate taxes, it would be more efficient and fairer to do so by reducing the tax credits and deductions in the code, than by raising the tax rate.

Dividends 52

Dividends Start-ups Risk Premium Treasury 52

Musings on Markets

JANUARY 28, 2024

In particular, there are wide variations in how risk is measured, and once measured, across companies and countries, and those variations can lead to differences in expected returns and hurdle rates, central to both corporate finance and investing judgments. Analysts often try to bring company-specific components, i.e,

Risk Premium 121

Risk Premium Beta Start-ups Equity 121

Musings on Markets

JANUARY 5, 2024

First, these categorizations were created close to twenty years ago, when I first started looking a global data, and many countries that were emerging markets then have developed into more mature markets now. Equity Risk Premiums 2. Financing Flows 5. Dividends and Potential Dividends (FCFE) 1. Buybacks 2. Lease Effect 2.

Dividends 105

Dividends Risk Premium Equity Book Value 105

Musings on Markets

JANUARY 10, 2025

It is the end of the first full week in 2025, and my data update for the year is now up and running, and I plan to use this post to describe my data sample, my processes for computing industry statistics and the links to finding them. In the table below, we compare the changes in regional market capitalizations (in $ millions) over time.

Risk Premium 119

Risk Premium Dividends Start-ups Corporate Finance 119

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. A few years ago, I wrote a paper for practitioners on the cost of capital , where I described the cost of capital as the Swiss Army knife of finance, because of its many uses.

Risk Premium 72

Risk Premium Beta Start-ups Equity 72

Musings on Markets

JANUARY 31, 2025

I am going to start this post with a confession that my knowledge of the architecture and mechanics of AI are pedestrian and that there will be things that I don't get right in this post. Along the way, the the AI story picked up supercomputing companies, as passengers, again on the belief that Ai systems would find a use for them.

Start-ups 133

Start-ups Marketability Technology Risk Premium 133

Musings on Markets

JULY 24, 2024

After the 2008 market crisis, I resolved that I would be far more organized in my assessments and updating of equity risk premiums, in the United States and abroad, as I looked at the damage that can be inflicted on intrinsic value by significant shifts in risk premiums, i.e., my definition of a crisis.

Risk Premium 75

Risk Premium Equity Start-ups EBITDA 75