Musings on Markets

FEBRUARY 12, 2025

In this post, I will focus on how companies around the world, and in different sectors, performed on their end game of delivering profits, by first focusing on profitability differences across businesses, then converting profitability into returns, and comparing these returns to the hurdle rates that I talked about in my last data update post.

Hurdle Rate 72

Hurdle Rate Accounting Investments Economics 72

Musings on Markets

JANUARY 31, 2024

In my last three posts, I looked at the macro (equity risk premiums, default spreads, risk free rates) and micro (company risk measures) that feed into the expected returns we demand on investments, and argued that these expected returns become hurdle rates for businesses, in the form of costs of equity and capital.

Hurdle Rate 80

Hurdle Rate Profit and Loss Accounting Investments 80

Barry Ritholtz

FEBRUARY 9, 2023

The current convergence involved some research I was doing centered on Dunning Kruger, Vanguard’s Tim Buckley, my partner Josh’s AI/ChatGPT post, and the general state of the market. Where the DK/GHC really overlap is when a new product has a low hurdle rate. But the group, as a whole benefitted.

Hurdle Rate 111

Hurdle Rate Technology Numbers Marketing 111

Musings on Markets

FEBRUARY 27, 2022

That said, about 31% of the net profits of all publicly traded firms listed globally in 2021 were generated by financial service firms; that percent is lower in the US and higher in emerging markets. IFRS and GAAP now treat as leases as debt, but that is still not the case in many other markets that are not covered by either standard).

Hurdle Rate 98

Hurdle Rate Investments Accounting Entertainment 98

Global Finance

FEBRUARY 4, 2025

It also boosts adaptability and maintains stability in challenging markets. According to a report published by market research and consulting firm IMARC Group, the global SCF market reached $7.5 According to a report published by market research and consulting firm IMARC Group, the global SCF market reached $7.5

Finance 52

Finance Invoicing Banking Manufacturing 52

Musings on Markets

AUGUST 15, 2023

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. The Swiss 10-year government bond rate, in July 2023, of 1.02% meets both criteria, making it the risk-free rate in Swiss Francs.

Investments 98

Investments Currencies Treasury Hurdle Rate 98

Musings on Markets

MARCH 5, 2025

After reporting on the total cash returned during the year, by public companies, in the form of dividends and buybacks, I scale the cash returned to earnings (payout ratios) and to market cap (yield) and present the cross sectional distribution of both statistics across global companies. In 2024, companies across the globe returned $4.09

Corporate Finance 52

Corporate Finance Investments Finance Hurdle Rate 52

Musings on Markets

MARCH 8, 2023

The dividend principle, which is the focus of this post is built on a very simple principle, which is that if a company is unable to find investments that make returns that meet its hurdle rate thresholds, it should return cash back to the owners in that business.

Hurdle Rate 102

Hurdle Rate Corporate Finance Investments Finance 102

Musings on Markets

AUGUST 19, 2024

The second is to look at the industry group or sector that a company is in, and then follow up by classifying that industry group or sector into high or low growth; for the last four decades, in US equity markets, tech has been viewed as growth and utilities as mature.

Corporate Finance 119

Corporate Finance Valuation Investments Finance 119

Musings on Markets

JANUARY 5, 2024

Thus, looking at only the companies in the S&P 500 may give you more reliable data, with fewer missing observations, but your results will reflect what large market cap companies in any sector or industry do, rather than what is typical for that industry.

Valuation 105

Valuation Financial Analysis Analyzing Data Profit and Loss 105

Barry Ritholtz

MAY 9, 2023

And then in a fit of madness, I guess, at the end of 2006, the credit markets were pretty uninteresting. So I had an interest in the Russian market. One, the London market is where it’s been most of my career. I knew the market, but I also knew the people there. There wasn’t a lot to do. SALISBURY: Yes.

Investments 119

Investments Banking Advertising Numbers 119

Musings on Markets

JANUARY 12, 2021

I take the point of view that uncertainty should not stop you from valuing companies, that your value estimates will have more error in them, but since the market also faces the same uncertainty, your best bargains may be in the midst of uncertainty. That tells me three things.

Valuation 52

Valuation Corporate Finance Finance Investments 52

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. Risk premiums can and will change over time : Risk premiums are driven by risk aversion, and risk aversion itself can change over time.

Treasury 52

Treasury Investments Valuation Marketing 52

Musings on Markets

JANUARY 6, 2023

Counter made-up numbers : It remains true that people (analysts, market experts, politicians) often make assertions based upon either incomplete or flawed data, or no data at all. Data universe : In my sample, I include all publicly traded firms with market capitalizations that exceed zero, traded anywhere in the world.

Valuation 52

Valuation Corporate Finance Financial Analysis Leverage 52

Musings on Markets

FEBRUARY 15, 2023

Both accounting returns are computed based upon book value, not because we have suddenly developed trust in accounting, but because the objective is to estimate what investors have earned on what they originally invested in a company, rather than an updated or a marked-to market value.

Profit and Loss 52

Profit and Loss Investments Hurdle Rate Accounting 52

CFO News Room

NOVEMBER 8, 2022

directly via email: Resources Featured In This Episode: Looking for sample client service calendars, marketing plans, and more? And we’re going to talk about what’s going on in the markets, briefly talk about the portfolio. ” look at the Monte Carlo simulations, look at what is the hurdle rate.

Restructuring 130

Restructuring Planning Marketing Accounting 130

Musings on Markets

JANUARY 27, 2021

As stock and bond markets went through these gyrations, it should come as no surprise that the same forces were playing out in other markets as well. Commodities With that lengthly lead in, let's look at what 2020 brought as surprises to the commodity market. against developed market currencies.

Currencies 52

Currencies Investments Marketing Treasury 52

Musings on Markets

JANUARY 9, 2021

I spent the first week of 2021 in the same way that I have spent the first week of every year since 1995, collecting data on publicly traded companies and analyzing how they navigated the cross currents of the prior year, both in operating and market value terms.

Valuation 52

Valuation Currencies Numbers Corporate Finance 52

Barry Ritholtz

FEBRUARY 21, 2023

And I love business, I love the markets, I want to go there. What sort of challenges — BUCKLEY: A couple of bear markets. BUCKLEY: We’ve had, let’s see, inflation at a 40-year high, tightest labor market of our lifetimes. We were losing market share in the critical retirement, the 401(k) business.

Leadership 111

Leadership Investments Profit and Loss Technology 111

Musings on Markets

FEBRUARY 27, 2023

Note that this framework applies for all businesses, from the smallest, privately owned businesses, where debt takes the form of bank loans and even credit card borrowing and equity is owner savings, the largest publicly traded companies, where debt can be in the form of corporate bonds and equity is shares held by public market investors.

Corporate Finance 52

Corporate Finance Finance Marketing Banking 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. RITHOLTZ: That’s how you know it’s going to be low?

Valuation 59

Valuation Finance Investments Banking 59

Musings on Markets

JANUARY 28, 2024

In my last data updates for this year, I looked first at how equity markets rebounded in 2023 , driven by a stronger-than-expected economy and inflation coming down, and then at how interest rates mirrored this rebound.

Hurdle Rate 117

Hurdle Rate Concentration Investments Finance 117

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.

Currencies 52

Currencies Hurdle Rate Valuation Marketing 52

Musings on Markets

FEBRUARY 23, 2025

The cost of debt is lower than the cost of equity : If you review my sixth data update on hurdle rates , and go through my cost of capital calculation, there is one inescapable conclusion. At every level of debt, the cost of equity is generally much higher than the cost of debt for a simple reason.

Hurdle Rate 75

Hurdle Rate Marketing Investments IFRS 75

Barry Ritholtz

MAY 21, 2024

It’s because, you know, when everybody’s looking at all this data and it all seems terrible, chances are that information’s priced into the market. I 00:13:35 [Speaker Changed] Met him at a, a, a Market Technician’s Association. About equity markets. Oh, nice event. 00:13:46 [Speaker Changed] Yes.

Finance 59

Finance Marketing Numbers Investments 59

Barry Ritholtz

DECEMBER 26, 2023

You work at Capital Growth Financial and in former global markets before you join investing Giant Merrill Lynch in 2007, what was that transition like from smaller shops to a really, really big one? You go on the road, you see offices, they ask you questions about markets, stocks, things like that. That’s right.

Marketing 64

Marketing Leadership Finance Investments 64

Barry Ritholtz

NOVEMBER 25, 2024

He, he does some really, really interesting research and gets deep into the weeds on things like market structure, liquidity cascades, what really drives returns, how much should you be focused on alpha versus beta. And I, and I really like the application of math and statistics and computer science to markets. It’s just a model.

Leverage 59

Leverage Investments Marketing Math 59

Musings on Markets

JULY 24, 2024

After the 2008 market crisis, I resolved that I would be far more organized in my assessments and updating of equity risk premiums, in the United States and abroad, as I looked at the damage that can be inflicted on intrinsic value by significant shifts in risk premiums, i.e., my definition of a crisis.

Hurdle Rate 75

Hurdle Rate Currencies Valuation Economics 75