Valuation

Market-Expected Return on Investment

Bridging Accounting and Valuation Another paper from Michael Mauboussin and another good one. They discuss the role of intangibles and the issues that arise when investments in those via SG&A are not properly capitalized on the balance sheet. Intangibles are becoming more and more important these days …and most of them are not even properly […]

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macro, cogwheel, gear

What the CAPE Ratio Shows and Doesn’t Show

The Cyclically Adjusted P/E ratio or CAPE goes back to Robert Shiller. He is a Professor of Economics, has received a Nobel Prize and is a very friendly person. He is also well known for his research around behavioral finance and psychology, but most of all, house prices and the Case–Shiller house price index. The […]

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puzzle, money, business

We all Use Relative Valuation, Even When We Don’t Admit It

Some solid quotes from a recent paper by Aswath Damodaran, who teaches corporate finance and valuation at the Stern School of Business at New York University. “Most investment rules of thumb are based upon multiples. For instance, many investors consider companies that trade at less than book value as cheap as well as stocks that […]

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