Musings on Markets

AUGUST 5, 2023

If you have been reading my posts, you know that I have an obsession with equity risk premiums, which I believe lie at the center of almost every substantive debate in markets and investing. The risk premium that you demand has different names in different markets.

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Risk Premium Equity Start-ups Treasury 80

Musings on Markets

JANUARY 20, 2021

Investors are constantly in search of a single metric that will tell them whether a market is under or over valued, and consequently whether they should buying or selling holdings in that market. Note that nothing that I have said so far is premised on modern portfolio theory, or any academic view of risk premiums.

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Risk Premium Risk-free Rate Equity Dividends 52

Musings on Markets

MARCH 25, 2021

The first quarter of 2021 has been, for the most part, a good time for equity markets, but there have been surprises. The first has been the steep rise in treasury rates in the last twelve weeks, as investors reassess expected economic growth over the rest of the year and worry about inflation. for 2021 and inflation of 2.2%

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Equity Risk-free Rate Treasury Start-ups 52

ThomsonReuters

MAY 6, 2021

Discounted cash flow approaches are also utilized within other functions of an organization, such as treasury, budgeting, financial planning and analysis, and tax planning. An entity may draw from its own experience as well as that of its peers, industry, geography, market, or other pertinent source.

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Musings on Markets

JANUARY 21, 2023

It is the nature of stocks that you have good years and bad ones, and much as we like to forget about the latter during market booms, they recur at regular intervals, if for no other reason than to remind us that risk is not an abstraction, and that stocks don't always win, even in the long term.

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Equity Risk Premium Start-ups Dividends 72

Musings on Markets

MAY 24, 2021

As we approach the mid point of 2021, financial markets, for the most part, have had a good year so far. All of these measures, no matter how carefully designed, give a measure of inflation in the past, and markets are ultimately concerned more with inflation in the future.

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Treasury Start-ups Risk Premium Price to Book 55

Brian DeChesare

FEBRUARY 28, 2024

and different teams specialize in different instruments (investment-grade, high-yield, distressed, structured, sovereign, emerging markets, etc. – The fixed income market dwarfs equities in terms of market value and trading volume, but that does not necessarily translate into “more jobs.” Treasury yield at?

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Equity Banking Start-ups Finance 59

Musings on Markets

FEBRUARY 15, 2023

As I have argued in all four of my posts, so far, about 2022, it was year when we saw a return to normalcy on many fronts, as treasury rates reverted back to pre-2008 levels, and risk capital discovered that risk has a downside.

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Equity Start-ups Risk Premium Risk-free Rate 52

Valutico

OCTOBER 20, 2022

The important figure there is r, which we’re using as the discount rate in this whole equation. But here, we use what interest we could get from an alternative investment in the market, called the Market Rate. This is the rate of return you’d get if you invested your money today instead. . Rf = Risk-free Rate.

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Discounted Cash Flow Terminal Value Weighted Average Cost of Capital Net Present Value 52

Musings on Markets

AUGUST 15, 2023

In every introductory finance class, you begin with the notion of a risk-free investment, and the rate on that investment becomes the base on which you build, to get to expected returns on risky assets and investments. What is a risk free investment? Why does the risk-free rate matter?

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Risk-free Rate Risk Premium Treasury Start-ups 83

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). The year that was.

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Risk Premium Risk-free Rate Start-ups Equity 82

Musings on Markets

JULY 13, 2022

I know that there are some of you, who distrust ratings agencies, arguing that they have regional and other biases and/or that they do not adjust ratings in a timely fashion. Country Risk: Equity Risk For equity investors, the price of risk is captured by the equity risk premium, and equity risk premiums will vary across countries.

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Risk Premium Risk-free Rate Start-ups Equity 83

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!

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Musings on Markets

JULY 25, 2023

The other is pragmatic , since it is almost impossible to value a company or business, without a clear sense of how risk exposure varies across the world, since for many companies, either the inputs to or their production processes are in foreign markets or the output is outside domestic markets.

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Risk Premium Equity Start-ups Risk-free Rate 52