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MoneyScience Financial Training: Introduction to QuantLib Development - London, March 13th-15th, 2017

 

Musings on Markets's Blog

May you live in "exciting" times! An Updated Picture of Country Risk

July 23, 2016 Comments (0)

About a year ago, I completed my first  update of a paper looking at all aspects of country risk, from political risk to default risk to equity risk, and wrote about my findings in three posts, one on how to incorporate risk in company value, the second on the pricing of country risk and the last one on decoding currencies. The twelve months since have been interesting, to say the least, and unsettling to many as markets were buffeted by crises. In August 2015, a month after my...

May you live in "exciting" times! An Updated Picture of Country Risk

July 22, 2016 Comments (0)

About a year ago, I completed my first  update of a paper looking at all aspects of country risk, from political risk to default risk to equity risk, and wrote about my findings in three posts, one on how to incorporate risk in company value, the second on the pricing of country risk and the last one on decoding currencies. The twelve months since have been interesting, to say the least, and unsettling to many as markets were buffeted by crises. In August 2015, a month after my...

Tesla: It's a story stock, but what's the story?

July 14, 2016 Comments (0)

The last few weeks have tested Tesla’s shareholders and frustrated short sellers in the stock. Shareholders have had to weather a series of bad news stories, ranging from a failure to meet its shipment targets in the last few months to a fatality with a driver using its autopilot function to a surprise acquisition of Solar City. While each of those stories has created pressure on the stock, the price has held up surprisingly well, frustrating long-time short sellers who have been waiting for...

The Brexit Effect: The Signals amidst the Noise

June 29, 2016 Comments (0)

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Icahn, Buffett and Apple: Big Name Investors, Value and Price!

June 6, 2016 Comments (0)

In my last post, I looked at Apple, arguing, with a Monte Carlo simulation, that the stock was a good investment at the prevailing market price ($93 at the time of the analysis). I appreciate the many comments that I got on the analysis, some taking issue with the distributions that I used for profit margins and revenue growth and some taking me to task for ignoring the fact that big name investors were either entering and exiting the stock. Those who felt that my valuation was optimistic...

DCF Myth 3.2: If you don't look, its not there!

May 23, 2016 Comments (0)

In this, the last of my three posts on uncertainty, I complete the cycle I started with a look at the responses (healthy and unhealthy) to uncertainty and followed up with an examination of the Margin of Safety, by taking a more extended look at one approach that I have found helpful in dealing with uncertainty, which is to run simulations. Before you read this post, I should warn you that I am not an expert on simulations and that the knowledge I bring to this process is minimalist and my...

DCF Myth 3.1: The Margin of Safety - Tool for Action or Excuse forInaction?

May 3, 2016 Comments (0)

In my last post on dealing with uncertainty, I brought up the margin of safety, the tool that many value investors claim to use to protect themselves against uncertainty. While there are certainly some in the value investing community who have found a good way to incorporate MOS into their investing process, there are many more who seem to have misconceptions about what it does for them as well as the trade off from using it.  The Margin of Safety: Definition and RationaleWhile the...

DCF Myth 3: You cannot do a valuation, when there is too much uncertainty!

May 2, 2016 Comments (0)

Uncertainty, both imminent and resolved, has been on my mind these last two weeks. I posted my valuation of Valeant on April 20, making the argument that, at least based on my expectations on what could be revealed in the delayed financial filings, the stock was worth about $44, approximately $12 more than the prevailing stock price. Many of you were kind enough to comment on my valuation, and one of the more common refrains was there were too many unknowns on the stock to be taking a stand....

Valeant: Information Vacuums, Management Credibility and Investment Value

April 20, 2016 Comments (0)

As an investor, would you buy shares in a company that is at the center of a political and legal firestorm? What if this company has a CEO who has lost the faith of his board and an ex-CFO who is being accused of shady financial practices? And would you pull  the buy trigger if the company has delayed its scheduled annual filing by more than two months, and by doing so is running the risk of violating debt covenants and being pushed into default? And to top it all off, would you be a...

Negative Interest Rates: Impossible, Unnatural or Just Unusual?

March 11, 2016 Comments (0)

In the years since the 2008 crisis, there is no question in finance that has caused more angst among investors, analysts and even onlookers than what to do about "abnormally low" interest rates. In 2009 and 2010, the response was that rates would revert back quickly to normal levels, once the crisis had passed. In 2011 and 2012, the conviction was that it was central banking policy that was keeping rates low, and that once banks stopped or slowed down quantitative easing, rates would...