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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. trillion in marketcapitalization, but for balance, it is also worth noting that US equities are still holding on to a gain of $6.9
That positive result notwithstanding, the recovery was uneven, with a big chunk of the increase in marketcapitalization coming from seven companies (Facebook, Amazon, Apple, Microsoft, Alphabet, NVidia and Tesla) and wide divergences in performance across stocks, in performance. increase in marketcapitalization.
Exacerbating the pain, corporate default spreads rose during the course of 2022: While default spreads rose across ratings classes, the rise was much more pronounced for the lowest ratings classes, part of a bigger story about riskcapital that spilled across markets and asset classes. that was lost last year.
The graph below contains Tesla's stock price, adjusted for stock splits, going back to 2010, and ending in November 2021: While the graph illustrates the surge in the stock price, the table embedded in the graph conveys the rise more vividly, by listing Tesla's marketcapitalization in millions of dollars.
When you augment this price change with the dividends on the index during 2021, the total return on the S&P 500 for 2021 was 28.47%. To get a measure of what equity markets are offering in terms of expected returns, we are better served with a forward-looking and dynamic measure of these returns, and that is the focus of this section.
When valuing or analyzing a company, I find myself looking for and using macro data (riskpremiums, default spreads, tax rates) and industry-level data on profitability, risk and leverage. Data universe : In my sample, I include all publicly traded firms with marketcapitalizations that exceed zero, traded anywhere in the world.
While the universe of companies is diverse, with approximately half of all firms from emerging markets, it is more concentrated in marketcapitalization, with the US accounting for 40% of global marketcapitalization at the start of the year.
Regional Breakdown My data sample for 2022 includes every publicly traded firm that is traded anywhere in the world, with a marketcapitalization that exceeds zero. It is also why I report only aggregated data on industries, rather than company-level data.
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 RiskPremiums 2.
In my last post , I noted that the US has extended its dominance of global equities in recent years, increasing its share of marketcapitalization from 42% in at the start of 2023 to 44% at the start of 2024 to 49% at the start of 2025.
Thus, as you peruse my historical data on implied equity riskpremiums or PE ratios for the S&P 500 over time, you may be tempted to compute averages and use them in your investment strategies, or use my industry averages for debt ratios and pricing multiples as the target for every company in the peer group, but you should hold back.
In the first five posts, I have looked at the macro numbers that drive global markets, from interest rates to riskpremiums, but it is not my preferred habitat. The second set of inputs are prices of risk, in both the equity and debt markets, with the former measured by equity riskpremiums , and the latter by default spreads.
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