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No matter how you slice it, there is no denying that 2022 was the worst year for US equity investors since 2008, and the magnitude of the damage is even more staggering, if you consider it in market value terms. trillion in marketcapitalization, but for balance, it is also worth noting that US equities are still holding on to a gain of $6.9
Beyond the 10-year maturity, the slope of the yield curve actually flattened out, with the difference between the 30-year rate and the 10-year rate declining by 0.34%. Note that the decrease in default spreads, at least for the lower ratings, mirrors the drop in the implied equity riskpremium during the course of 2021.
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. for mature markets.
for the year are at war with its concurrent promise to keep rates low; after all, adding those numbers up yields a intrinsic riskfreerate of 8.7%. The Stocks Story As treasury rates have risen in 2021, equity markets have been surprisingly resilient, with stocks up during the first three months.
The first of the is as companies scale up, there will be a point where they will hit a growth wall, and their growth will converge on the growth rate for the economy. There is not much room to maneuver on either number, since half of all US companies have costs of capital between 7.3% It was the reason that I argued at a $1.2
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 riskfreerates (with the treasury bond rate at 0.93% at the start of 2021).
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. For debt markets, it takes the form of default spreads, and I report the latest estimates of these corporate bond spreads at this link.
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. Equity RiskPremiums 2. Return on (invested) capital 2. Tax rates 4.
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. At this stage, you may be ready to bail on stocks, but I have one final card to play.
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 marketcapitalization available for them. I converted all of the marketcapitalizations into US dollars , just to make them comparable.
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