My not-so-profound thoughts about valuation, corporate finance and the news of the day!
Earlier this year, I was asked what I thought about Leopold Aschenbrenner and I admitted that I knew little about him other than what I had read about him, more in social media, than in the press - that he was a 25-year-old wunderkind who had started at OpenAI but had left to start a hedge fund. That hedge fund, built entirely around a bet that AI would pay off big time and near term, buying…
I am a lapsed academic, insofar as I have not submitted a paper for publication in more than two decades, but to acquire academic status, I did have to earn a PhD in the distant past. My doctoral dissertation , which like most doctoral theses is little noted and long forgotten, was completed in 1984 and focused on how the frequency of and delays in the release of information plays out in stock…
I am a creature of habit in my personal and professional life, and in the context of the content that I post online, there is a ritual that I follow with my data updates. I start the year with my general data update online , and follow up with a series of posts where I examine the implications of this data for investing and corporate finance. Since 2008, I have also done annual update papers on…
Over the last few weeks, attention has (rightly) been focused on three potentially trillion dollar companies all lined up to go public, and much of the discussion has been about what SpaceX, Anthropic and OpenAI are worth (and will be priced at). In parallel, there has been a debate about indices and index inclusion criteria, a usually bland topic, but one that has become heated on the questions…
A few weeks ago, I assessed the value of SpaceX ahead of its initial public offering , with the admission that I was making my estimates with drabs of data, some of it coming from unofficial sources. I also promised to revisit my valuation, when the prospectus came out, and now that it has, I will examine how the information it contains has changed my view of the company and its valuation. I will…
Through time, we have glorified conquerors and empire builders in politics, civic life and business, from Alexander the Great and Genghis Khan to the tech titans of today. That is no surprise, since these individuals have oversized personas and often change the course of history, but it is also true that this glorification of empire building has shortcomings. The first is the deification of these…
In 2001, A Space Odyssey , a movie that was well ahead of its time when it was released in 1968, Hal (the computer) famously responded to questions about his reliability with “it (mstakes) can only be attributable to human error”. I was reminded of my fallibility repeatedly as I tried to value SpaceX ahead of its initial public offering, a market debut that is shaping up as a barn-burner for three…
Markets play an expectations game, and in March 2026, we saw the process play out, with all of its upsides and downsides. The month started with a war in the Middle East, which quickly percolated into soaring oil prices and dropping stock prices, but the overwhelming factor was uncertainty about almost every dimension of the war - how long it would last, what permanent changes to oil prices would…
When uncertainty roils markets, as is the case right now, it is natural for investors to get knocked off balance, a when off-balance, to make investment decisions that they often regret later. It is during those times that it helps to have a core set of beliefs about markets, and an investment philosophy that reflects those beliefs. You may not be able to mend the damage to your portfolio, but it…
I start my valuation classes with a question of whether valuation is an art or a science, and I argue that it is neither; it does not have the precision that characterizes a science and unlike an art, it does come with principles that constrain you on what you can and cannot do. I describe valuation as a craft, where you learn as you value companies, and in the process, there are times where you…
When Chat GPT made its debut on November 30, 2022, it unleashed the hype of AI, and in the three years since, AI has taken on an outsized role not just in markets, but also in our lives. For much of the time, the AI story has been told by its advocates and its salespeople, and the companies in the AI ecosystem have benefited. Not surprisingly, given that its narrators benefit from this growth,…
In the data update posts this year, I have wended my way from the macro (equities collectives, the bond market and other asset classes) to the micro, starting with hurdle rates and returns in posts five and six and the debt/equity choice in my seventh post. In this post, I will look at the decision by businesses on how much cash to return to their owners, and in what form (dividends or buybacks),…
In my fifth data update , I examined hurdle rates in 2025, and in my sixth data update , I looked at the profitability and return metrics for firms. Both hurdle rates and profitability metricsmcan be affected by how much debt companies choose to have in their financing structure, and it enters explicitly into my cost of capital calculations , both through the costs of equity/debt and the mix of…
Crass and mercantile though this may sound, the end game for a business is to make money, and a business that fails this simple test cannot survive for long, no matter how noble its social mission, how great its products and how much it is loved by its customers and employees. In this post, I start with a defense of this mercantile objective, and argue that attempts to expand it to incorporate…
In my first four posts, I looked at markets - equity, debt and collectibles - in the aggregate performed in 2025. In this post, I turn my attention to divergences in risk across companies, looking at alternative measures of risk, some based on prices and others at earnings, and how these differences play out in hurdle rates, a necessary ingredient for businesses trying to determine whether and how…
If you have read my first three data updates in 2026, I won’t blame you if you skip this one, because you found them long and boring. I won't take issue with you either if you viewed them as too US-focused, because I did spend my second data update , looking at US equities, and my third , examining US treasuries and the US dollar. In this post, I widen my data analysis to look at the rest of the…
In my last post , I talked about the disconnect between the bad news stories that we were reading and the solid performance of US equities during 2025. In this one, I want to focus specifically on four news stories from last year - the US announcement of punitive tariffs on the rest of the world, the downgrade of the US, the longest shutdown in US government history and unprecedented challenges to…
It was a disquieting year , as political and economic news stories shook the foundations of the post-war economic order, built around global trade and the US dollar. In fact, if you had been read just the news all through the year, and were shielded from financial markets, and been asked what stocks did during the year, you would have guessed, based on the news, that they had a bad year. You would…
In my musings on valuation, I have long described myself as more of a number cruncher than a storyteller, but it is because I love numbers for their own sake, rather than a fondness for abstract mathematics. It is that love for numbers that has led me at the beginning of each year since the 1990s to take publicly available data on individual companies, both from their financial statements and from…
Stock markets have always rewarded winners with large capitalizations, and with each new threshold, the questions begin anew of whether animal spirits or fundamentals are driving the numbers. A few weeks ago, Nvidia seemed unstoppable as its market capitalization crested $5 trillion, and while markets have turned skeptical since, the core questions have not gone away, and the answers come from two…
I grew up in India in a time where if you had wealth, your investment options were limited. A stock market with sparse listings, accompanied by a lack of trust in financial assets, led investors to put their wealth into tangible assets. Real estate was the most common choice but gold was a strong competitor, though investments in the latter often took the form of jewelry and ornaments. As…
In December 1996, Alan Greenspan used the words "irrational exuberance" to describe the stock market at the time, and those words not only became the title of Robert Shiller's cautionary book on market bubbles, but also the beginnings of the belief that central bankers had the wisdom to be market timers and the power to bend the economy to their views. I think that Greenspan's words seem…
A few weeks ago, I started receiving a stream of message about an Instagram post that I was allegedly starring in, where after offering my views on Palantir's valuation, I was soliciting investors to invest with me (or with an investment entity that had ties to me). I was not surprised, since I have lived with imitations for years, but I was bemused, since I don't have an Instagram account and…
At the start of July, I updated my estimates of equity risk premiums for countries, in an semiannual ritual that goes back almost three decades. As with some of my other data updates, I have mixed feelings about publishing these numbers. On the one hand, I have no qualms about sharing these estimates, which I use when I value companies, because there is no secret sauce or special insight embedded…
In this post, I will bring together two disparate and very different topics that I have written about in the past. The first is the role that cash holdings play in a business , an extension of the dividend policy question, with an examination of why businesses often should not pay out what they have available to shareholders. In my classes and writing on corporate finance, I look at the motives…