Appraisal Rights

JUNE 5, 2017

In selecting the appropriate equity risk premium, the court observed that whether to use supply-side or historical ERP should be determined on a case-by-case basis.

Beta 40

Beta Risk Premium Capital Structure Discounted Cash Flow 40

Musings on Markets

FEBRUARY 2, 2023

Finally, my starting cost of capital of 10.15% reflects the reality that the riskfree rate and equity risk premiums have risen over 2022, and my ending number of 9% is an indication that I expect Tesla to become less risky over time. It was the reason that I argued at a $1.2

Start-ups 99

Start-ups Risk-free Rate Market Capitalization Risk Premium 99

Musings on Markets

JANUARY 19, 2022

If equity markets surprised us with their resilience in 2020, not just weathering a pandemic for the ages, but prospering in its midst, US equity markets, in particular, managed to find light even in the darkest news stories, and continued their rise through 2021. The year that was.

Risk Premium 98

Risk Premium Risk-free Rate Start-ups Equity 98

Musings on Markets

JANUARY 6, 2023

When valuing or analyzing a company, I find myself looking for and using macro data (risk premiums, 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 market capitalizations that exceed zero, traded anywhere in the world.

Risk Premium 52

Risk Premium Dividends Start-ups EBITDA 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

MARCH 19, 2022

The Market Reaction As the rhetoric of war has heated up in the last few months, markets were wary about the possibility of war, but as Russian troops have advanced into the Ukraine, that wariness has turned to sell off across markets. As Russian equities have imploded, the ripple effects again are being felt across the globe.

Start-ups 100

Start-ups Risk Premium Equity Market Capitalization 100

Musings on Markets

FEBRUARY 27, 2023

To fund the business, you can either use borrowed money (debt) or owner's funds (equity), and while both are sources of capital, they represent different claims on the business. Even government-owned businesses fall under its umbrella, with the key difference being that equity is provided by the taxpayers.

Equity 52

Equity EBITDA Start-ups Net Debt 52

Musings on Markets

JANUARY 8, 2022

Regional Breakdown My data sample for 2022 includes every publicly traded firm that is traded anywhere in the world, with a market capitalization that exceeds zero. For debt markets, it takes the form of default spreads, and I report the latest estimates of these corporate bond spreads at this link.

Risk Premium 99

Risk Premium Start-ups Market Capitalization Corporate Finance 99

Musings on Markets

JANUARY 5, 2024

Since I am lucky enough to have access to databases that carry data on all publicly traded stocks, I choose all publicly traded companies, with a market price that exceeds zero, as my universe, for computing all statistics. Beta & Risk 1. Return on Equity 1. Equity Risk Premiums 2. Return on Equity 2.

Dividends 105

Dividends Risk Premium Equity Book Value 105

Musings on Markets

JANUARY 17, 2025

In my last post , I noted that the US has extended its dominance of global equities in recent years, increasing its share of market capitalization from 42% in at the start of 2023 to 44% at the start of 2024 to 49% at the start of 2025.

Equity 126

Equity Risk Premium Treasury Start-ups 126

Musings on Markets

JANUARY 10, 2025

Thus, as you peruse my historical data on implied equity risk premiums 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.

Risk Premium 115

Risk Premium Dividends Start-ups Corporate Finance 115

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

JANUARY 31, 2025

Since the companies involved in building the AI infrastructure are the ones that are most tangibly (and immediately) benefiting from the AI boom, they are also the companies that have seen the biggest boost in market cap, as the AI story heated up.

Start-ups 131

Start-ups Marketability Technology Risk Premium 131

Reynolds Holding

FEBRUARY 23, 2025

Effective and well-designed laws governing investment and financial markets are the single most important foundation for financial markets to allocate capital efficiently while providing optimal reassurance to investors and lenders. In the United States, the cost of capital is lower than elsewhere. 3] [link]. [4]

Systematic Risk 45

Systematic Risk Marketability Equity Risk Premium 45

Musings on Markets

FEBRUARY 6, 2025

It is for this reason that I chose to compute returns differently, using the following constructs: I included all publicly traded stocks in each market, or at least those with a market capitalization available for them. I converted all of the market capitalizations into US dollars , just to make them comparable.

Risk Premium 67

Risk Premium Start-ups Enterprise Value Equity 67