Musings on Markets

JANUARY 19, 2022

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).

Risk Premium 99

Risk Premium Risk-free Rate Start-ups Equity 99

Musings on Markets

JANUARY 21, 2023

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. As with the yield to maturity for a bond, I solve for the discount rate (IRR) that makes the present value of cashflows on the index equal to the level of the index. Stocks: The What Next?

Equity 96

Equity Risk Premium Start-ups Dividends 96

Musings on Markets

JANUARY 20, 2021

If, on the other hand, investors are risk neutral, the price of risk will be zero, and investors will buy risky business, stocks and other investments, and settle for the risk free rate as the expected return.

Risk Premium 52

Risk Premium Risk-free Rate Equity Dividends 52

Musings on Markets

AUGUST 5, 2023

In short, the expected return on a risky investment can be constructed as the sum of the returns you can expect on a guaranteed investment, i.e., a riskfree rate, and a risk premium, which will scale up as risk increases. The risk premium that you demand has different names in different markets.

Risk Premium 98

Risk Premium Equity Start-ups Treasury 98

Musings on Markets

JANUARY 5, 2024

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.

Dividends 105

Dividends Risk Premium Equity Book Value 105

Andrew Stolz

JANUARY 28, 2022

Attractive dividend yield could rise to 2x Japanese average. Download the full report as a PDF. Attractive dividend yield could rise to 2x Japanese average. In the past share, the company has increased its dividend per share and is likely to maintain that level. Historically, Japan has a very low risk-free rate.

Dividends 52

Dividends Risk-free Rate Net Debt Equity 52

Musings on Markets

FEBRUARY 8, 2022

At the start of 2022, the ten sectors (US) with the highest and lowest relative risk (unlettered betas), are shown below. 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.

Risk Premium 95

Risk Premium Beta Start-ups Equity 95