Musings on Markets

AUGUST 15, 2023

After the rating downgrade, my mailbox was inundated with questions of what this action meant for investing, in general, and for corporate finance and valuation practice, in particular, and this post is my attempt to answer them all with one post. and the reverse will occur, when risk-free rates drop.

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Investments Currencies Treasury Hurdle Rate 98

Musings on Markets

JANUARY 12, 2021

Thus, you and I can disagree about whether beta is a good measure of risk, but not on the principle that no matter what definition of risk you ultimately choose, riskier investments need higher hurdles than safer investments. pm (New York time) Valuation (MBA): Mondays & Wednesdays, 2.00 Don't get me wrong!

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Valuation Corporate Finance Finance Investments 52

Musings on Markets

JANUARY 6, 2023

It is perhaps a reflection of my age that I remember when getting data to do corporate financial analysis or valuation was a chore. Thus, without a sense of what comprises a high or low profit margin for a firm, or what the cost of capital is for the typical company, it is easy to create "fairy tale" valuations and analyses.

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Valuation Corporate Finance Financial Analysis Leverage 52

Musings on Markets

JANUARY 20, 2021

Risk free rates over time : While it is generally not a good idea to play interest rate forecaster, we are in unusual times, with rates close to all time lows. On the risk free rate, I assume that rates will rise over time to 2%, and that 5% is a fair ERP, given history. Data Update 2 for 2021: The Price of Risk!

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Treasury Investments Valuation Marketing 52

Musings on Markets

JANUARY 9, 2021

To illustrate, consider a practice in valuation, where analysts are trained to add a small cap premium to discount rates for smaller companies, on the intuition that they are riskier than larger companies. It is very likely that these rules of thumb were developed from data and observation, but at a different point in time.

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Valuation Currencies Numbers Corporate Finance 52

Musings on Markets

JULY 25, 2023

One is curiosity , as political and economic crises roll through regions of the world, roiling long-held beliefs about safe and risky countries. My suggestion is that for countries where recent political or economic events would lead you to believe that sovereign rating is dated, you should switch to using sovereign CDS spreads.

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Currencies Hurdle Rate Valuation Marketing 52

Barry Ritholtz

NOVEMBER 8, 2022

CHANCELLOR: And look — yeah, but then if you look at the valuation of the market at that time, the market was — the U.S. CHANCELLOR: And look — yeah, but then if you look at the valuation of the market at that time, the market was — the U.S. All our economic actions are taking place across time.

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CFO News Room

NOVEMBER 8, 2022

Because the economics of profitability start showing up particularly when you’re starting to hire other advisors and staff and team. ” look at the Monte Carlo simulations, look at what is the hurdle rate. So, last year, valuations were high, interest rates were low. Is it at 1.5%?

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Musings on Markets

JULY 24, 2024

In the section below, I highlight the differences on four major dimensions - political structure, exposure to war/violence, extent of corruption and protections for legal and property rights, with the focus firmly on the economic risks rather than on social consequences. That is easier said than done, for two reasons.

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Barry Ritholtz

MAY 21, 2024

And one of the worst performing factors has been valuation. So we’re now in an environment where all the 45-year-old portfolio managers out there have been, have worked their entire careers in these momentum fueled markets, and they’ve been trained to believe that valuation doesn’t matter. 00:50:03 Not anymore.

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Finance Marketing Numbers Investments 59

Barry Ritholtz

NOVEMBER 25, 2024

There’s very few, I would argue probably no consistent predictors of, of any sort of economic or market cyclicality. 00:21:21 [Speaker Changed] So this story came out that, oh, value is defensive because it has this valuation buffer to it 00:21:28 [Speaker Changed] In that one example. They took a point and they drew a line.

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Leverage Investments Marketing Math 59