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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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?

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Musings on Markets

FEBRUARY 8, 2022

Risk and Hurdle Rates In investing and corporate finance, we have no choice but to come up with measures of risk, flawed though they might be, that can be converted into numbers that drive decisions. In corporate finance, this takes the form of a hurdle rate , a minimum acceptable return on an investment, for it to be funded.

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Musings on Markets

JANUARY 27, 2021

In my last post , I described the wild ride that the price of risk took in 2020, with equity risk premiums and default spreads initially sky rocketing, as the virus led to global economic shutdowns, and then just as abruptly dropping back to pre-crisis levels over the course of the year. Data Update 4 for 2021: The Hurdle Rate Question.

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Musings on Markets

JANUARY 12, 2021

During 2020, as I watched companies and investors struggle with the after shocks of the economic shut down created by COVID, I wrote a series of fourteen posts (linked below) on what I was learning, unlearning and relearning about corporate finance and valuation.

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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. As markets and companies have moved on, many of them no longer work, but investors continue to use them.

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Musings on Markets

MARCH 8, 2023

In the second, Warren Buffet used some heated language to describe those who opposed buybacks, calling them “economic illiterates” and “silver tongued demagogues “. For much of the last century, dividends were taxed in the US as ordinary income, at rates much higher than that paid on capital gains.

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Musings on Markets

JANUARY 6, 2023

When valuing or analyzing a company, I find myself looking for and using macro data (risk premiums, default spreads, tax rates) and industry-level data on profitability, risk and leverage. Data Items Much of my focus, when it comes to data, is on company-specific variables, rather than macro economic data, for two reasons.

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Musings on Markets

JANUARY 20, 2021

The failures of the signal have been variously attributed to low interest rates, accounting mis-measurement of earnings (especially at tech companies), and by some, to animal spirits. One explanation is that the bond market beliefs that the worst of the crisis is over and that default rates will return quickly to pre-COVID levels.

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Barry Ritholtz

NOVEMBER 8, 2022

His latest book could not be more timely, “The Price of Time: The Real Story of Interest,” it’s all about the history of interest rates, money lending, investing speculation, funded by banks and loans and credit. I’ve read the other stuff, Kindleberger got rate [ph] and that sort of stuff. There’s a shortage.

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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. And then we have the 0% cap.

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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. That risk can show up as costs (of buying protection or insurance) or as uninsurable risks that drive up the rates of return investors and businesses need to make, in order to operate.

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Barry Ritholtz

DECEMBER 26, 2023

It’s about a 50% fail rate, something like that. I rely on our analysts ratings at the firm. And if you’re, if a stock’s building a big base and say the analysts are 90% sell ratings, and a lot of volume is surged down, you know, when the stock first declined to save $5 from 20, right. Maybe even more.

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