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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. A key tool in both endeavors is a hurdlerate a rate of return that you determine as your required return for business and investment decisions.
Data: Trickle to a Flood! It is perhaps a reflection of my age that I remember when getting data to do corporate financialanalysis or valuation was a chore. Mean reversion : I am not a knee-jerk believer in mean reversion, but the tendency for numbers to move back towards averages is a strong one.
The numbers that I computed opened my eyes to how much perspective on the high, low, and typical values, i.e., the distribution of margins, helped in valuing the company, and how little information there was available, at least at that time, on this dimension. Aggregate operating numbers 3. Insider, CEO & Institutional holdings 2.
As the risk-free rate rises, expected returns on equities will be pushed up, and holding all else constant, stock prices will go down., and the reverse will occur, when risk-free rates drop. In a reflection of the times, there have been two developments.
It is perhaps a reflection of my age that I remember when getting data to do corporate financialanalysis or valuation was a chore. Mean reversion : I am not a knee-jerk believer in mean reversion, but the tendency for numbers to move back towards averages is a strong one. Data: Trickle to a Flood!
In closing, I also want to dispense with the notion that data is objective and that numbers-focused people have no bias. Finally, it is worth noting that, notwithstanding the travails of last year, the number of firms in the data universe increased from 44,394 firms at the start of 2020 to 46,579 firms, a 4.9%
The graph below shows the sovereign CDS levels, by country: Source: Bloomberg ( July 2023 data ) There are three things to note, as you browse these numbers. 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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