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Introduction to QuantLib training with Luigi Ballabio

19-21 October, London

Musings on Markets's Blog

Twitter announces IPO: The Pricing Game begins

September 18, 2013 Comments (0)

I have a Facebook account, but I almost never post. I also have a Linkedin account, but it is a not premium, largely because I am not that interested in finding out who is looking at my profile or endorsing me (often for skills I don't have). I do have a Twitter account and while I don’t post very often, I just like the ease with which it lets me bug thousands of people. All of this is of course a lead in to the story that I am sure will dominate the financial news for the next few weeks:...

Many a slip between the cup & the lip: From forward value to value per share today

September 11, 2013 Comments (0)

Valuing young, growth companies is never easy to do but it is well worth doing, partly because it forces you think through the business that the firm is in and what it is doing (or needs to do) to succeed. I know that many of you disagreed with my assumptions on the Tesla valuation and this post is not meant to refight that battle. There is one aspect of the Tesla valuation that I would like to focus on, not so much because of what it says about Tesla but for the more general lessons about...

Love the company! Love the product! Love the stock? An Update on Apple

September 9, 2013 Comments (0)

My first computer was a Mac 128K. I was a budget-constrained doctoral student from UCLA, teaching my very first class at UC Berkeley. At $2,500, in 1984 dollars, it consumed all of my discretionary income for that year, but it was love at first sight. Having sampled what the PC world had to offer, with its collection of geek speak and inscrutable illogic, I was dazzled by the human interface of the Mac and impressed with the creative spirits that ran the company (Steve Jobs & Steve...

Tesla: A Follow up

September 6, 2013 Comments (0)

My post on Tesla must have touched some nerves because I got more than my usual share of backlash from Tesla bulls. While some of it was just vitriol, many contained interesting counter arguments to mine. I thought it  would be useful to play devil’s advocate and present the case for being bullish on Tesla. I have to tell you that I was not able to convince myself but I may convince you. Before I make the case for Tesla bulls, I would like to be clear on two points. First, I have no...

Valuation of the week 1: A Tesla Test

September 4, 2013 Comments (0)

I taught the first session of my valuation class, that I previewed in my last post, today. As part of that class, I do what I call a “valuation of the week”, where I pick a company and value it and then post both my valuation (with the spreadsheet and the raw data that I used) and a shared Google spreadsheet for anyone who wants to take my valuation and make it their own (by changing the assumptions). I do this for two reasons. First, I believe that you learn valuation by valuing real...

MOOCs and Books: Spanning the Digital Divide

August 30, 2013 Comments (0)

As those of you who have followed my blog for awhile know, I post just before the start of a new semester about my upcoming classes and ways in which you can, if you so desire, be part of the experience.  In just under a week, on September 4, I will start the fifty first iteration of my valuation class to the second year MBAs at the Stern School of Business at New York University.  I am just as excited today, as I was when I taught my first version of this class in the 1980s, and I...

Market Mood Swings: Facebook Euphoria

July 31, 2013 Comments (0)

Facebook's stock price briefly hit $38, its IPO price, just before today's opening bell. In the 15 months since it went public, the stock had certainly had its ups and downs as evidenced in this graph: As some of you who have tracked my blog posts over the last couple of years know, I have tried to make sense of Facebook's value and how the market has been pricing it. Given today's news, I thought it would be useful to go back first to these earlier posts and then do a fresh valuation of the...

Market Multiples: Global Comparison and Analysis

July 30, 2013 Comments (0)

In my last two posts, I looked first at measures of country risk, both from a default risk and an equity market perspective, and then at stock pricing, using earnings and book value multiples, across developed and emerging markets. In summary, the conclusion that I drew was that the shift away from emerging markets in the last six months may be obscuring a much larger shift towards convergence between emerging and developed markets over the last decade. Thus, we can debate whether this...

Developed versus Emerging Markets: Convergence or Divergence?

July 29, 2013 Comments (0)

In my last post, I looked at country risk first from both a bondholder perspective (with ratings, default spreads and CDS spreads) as well as an equity investor perspective (with my estimates of equity risk premiums by country). While default spreads in sovereign bonds and differences in CDS spreads are explicit and visible to investors, the question of whether equity markets price in differences in equity risk premiums is debatable. In fact, there are quite a few analysts (and academics) who...

Rediscovering risk in emerging markets: A Country Risk Premium update

July 10, 2013 Comments (0)

Investors have a mixed relationship with risk, forgetting that it exists in the good times and obsessing about in bad times, and nowhere is this dysfunction more visible than in emerging markets. After a few years where investors seemed convinced that emerging markets were no riskier than developed markets, they seem to have woken up to the existence of risk with a vengeance in the last few months. As emerging markets around the world have been pummeled, analysts have sought to assign blame....