Musings on Markets

FEBRUARY 12, 2025

I am in the third week of the corporate finance class that I teach at NYU Stern, and my students have been lulled into a false sense of complacency about what's coming, since I have not used a single metric or number in my class yet. Data Update 4 for 2025: Interest Rates, Inflation and Central Banks!

Hurdle Rate 75

Hurdle Rate Accounting Investments Economics 75

Musings on Markets

JANUARY 5, 2024

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.

Valuation 107

Valuation Financial Analysis Analyzing Data Profit and Loss 107

CFO News Room

JANUARY 18, 2023

Even though we live in an age where user platforms and hyper revenue growth can drive company valuations, that adage remains true. The numbers yield interesting insights. . The proverbial bottom line for success in business is the capacity to deliver profits, at least in the long term.

Marketing 130

Marketing Hurdle Rate Investments Accounting 130

Musings on Markets

FEBRUARY 27, 2022

Even though we live in an age where user platforms and hyper revenue growth can drive company valuations, that adage remains true. The numbers yield interesting insights. The proverbial bottom line for success in business is the capacity to deliver profits, at least in the long term.

Hurdle Rate 99

Hurdle Rate Investments Accounting Entertainment 99

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.

Investments 98

Investments Currencies Treasury Hurdle Rate 98

Musings on Markets

JANUARY 12, 2021

Last week, was my data week, where I download and analyze data on all publicly traded companies, listed anywhere in the world, and I will post extensively on what the numbers look like after a most tumultuous year. As we approach the turn of the calendar year, I have my own set of rituals that prepare me for the new year.

Valuation 52

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.

Valuation 52

Valuation Corporate Finance Financial Analysis Leverage 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. In closing, I also want to dispense with the notion that data is objective and that numbers-focused people have no bias.

Valuation 52

Valuation Currencies Numbers Corporate Finance 52

Musings on Markets

JANUARY 20, 2021

In the picture below, I use this process to estimate an equity risk premium of 4.72% for the S&P 500 on January 1, 2021: Download spreadsheet to compute ERP It is true that my estimates of earnings and cash flows in the future are driving my premium, and that the premium will be lower (higher) if I have under (over) estimated those numbers.

Treasury 52

Treasury Investments Marketing Valuation 52

Musings on Markets

JULY 25, 2023

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. That said, there is no intellectual firepower or research behind these numbers, since I am letting the default ratings agencies and risk measurement services carry that weight.

Currencies 52

Currencies Hurdle Rate Valuation Marketing 52

CFO News Room

NOVEMBER 8, 2022

” look at the Monte Carlo simulations, look at what is the hurdle rate. So, last year, valuations were high, interest rates were low. And I said, “Look, you’ve got to look at where we are with valuations, and you have to look at where the 10-year Treasury is at. Is it at 1.5%?

Restructuring 130

Restructuring Planning Marketing Accounting 130

Barry Ritholtz

MAY 9, 2023

He co-chairs a number of the asset management investment committees. So I interviewed with a bunch of banks, got a number of job offers by the end of the week, and joined Goldman Sachs in October 1998. I ended up being hired onto the high yield desk as a research analyst and did that for a number of years, a couple of years.

Investments 119

Investments Banking Numbers Advertising 119

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 these factors have an interest rate embedded in them.

Valuation 59

Valuation Finance Investments Banking 59

Musings on Markets

JULY 24, 2024

Country Risk in Business Most corporate finance classes and textbooks leave students with the proposition that the right hurdle rate to use in assessing business investments is the cost of capital, but create a host of confusion about what exactly that cost of capital measures.

Hurdle Rate 78

Hurdle Rate Currencies Valuation Economics 78

Barry Ritholtz

MAY 21, 2024

So it’s got this math angle where it, you know, it’s all numbers, but then there’s this behavioral angle and psychological angle where, you know, it’s, it’s kind of a fun problem to tackle. It’s kind of a silly number, but people are going to think you’re smart or dumb based on that number.

Finance 59

Finance Marketing Numbers Investments 59

Barry Ritholtz

NOVEMBER 25, 2024

Honest back testing, really looking at the numbers versus exaggerating returns and, and making up the claim that something’s live when it’s not. 12, 14 even that not a lot of numbers. So you’ve got, you’ve got a modeling hurdle rate that you need to figure out when you’re adding diversifiers.

Leverage 59

Leverage Investments Marketing Math 59