Growth
A Great Company ≠ A Great Investment
As Benjamin Graham would put it, the quality and growth of a company do not determine your investment returns by themselves. What really matters is the price you […]
Archive
Reader level: Intermediate
DCF Valuation
Tao of Corporate Finance
The value formula from Valuation: Measuring and Managing the Value of Companies by McKinsey & Company (also referred to as the Tao of Corporate Finance) is: Value=NOPAT×(1−g/ROIC)WACC−gValue = […]
Investor Psychology
Sell in May and go away
Among investors in the securities market, there’s a saying: “Sell in May and go away.” Below is some supporting data, but what causes this? The chart below shows […]
Risk
Cost of Equity Formulas
According to the M&M theory, the formula for unlevering and levering capital is straightforward, but there are variations of the formula adapted to different situations. Situations can vary […]
Other Valuation Methods
Valuation of Cyclicals
It is evident from practice that in cyclical industries (aircraft, iron, paper, chemicals, real estate…) organizations periodically create excess capacity and cycle the industry. When selling prices are […]
Other Valuation Methods
Economic Spread Valuation of Banks
The text discusses the challenges and methods involved in valuing financial institutions, particularly banks, compared to corporations. Here’s an English translation: Valuing Banks: It is considered that evaluating […]
Cross-Border Valuation
Country Risk in Valuation
Evaluating organizations operating in developing countries is associated with certain difficulties, and in this area, academics and practitioners often do not agree. The issue is that developing markets […]