Market Efficiency
Market Timing
Market Timing as a long-term investing opposition strategy, but there was a time when mutual fund managers were making not bed money. The point is that sometimes the […]
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Understand stock price as a forecast
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Market Efficiency
Management Credibility
Why Does Management’s Credibility Affect Stock Prices? Below are Tesla’s financial strength indicators from GuruFocus.com (as of today). This site provides numerous interesting metrics, but I want to […]
Interest Rates
Financial Risks
List of risks from the book – Financial Markets and Institutions – By Anthony Saunders, Marcia Cornett and Otgo Erhemjamts: Here’s the corrected list of risks from the […]
Risk
Altman’s Z Score
Did you know that Altman’s Z-Score predicts an organization’s bankruptcy with 95% probability one year in advance and 75% probability two years in advance? I generally don’t believe […]
Market Efficiency
Expected Default Frequency Model
Unlike us, financial institutions in developed countries use the KMV method of credit monitoring to determine the Expected Default Frequency (EDF). Since Merton, Black, and Scholes made revolutionary […]
Interest Rates
Default Risk
Do You Consider Default Risk When Purchasing Bonds on the Georgian Market? If So, How Specifically? There is an interesting metric called RORAC (Return on Risk Adjusted Capital), […]
Risk
Liquidity Risk
Liquidity risk refers to the risk that an organization will not have enough liquid assets to meet its short-term obligations. This is a critical issue for any business, […]
WACC, CoC, Structure
WACC
How Do I Find the Discount Rate to Determine the Fair Price of a Specific Organization? The sensitivity of an organization’s value to the discount rate is very […]
WACC, CoC, Structure
Monte-Carlo Simulation
Do you know the value of your organization? Knowing and increasing the value of a commercial organization is a fundamental responsibility of top management. However, in developing countries […]
Market Efficiency
Economic Rent
Does your organization generate “economic rent”? How often can this occur? Economic rent is the surplus that accrues to capital above the weighted average cost of capital (WACC). […]
Market Efficiency
Fibonacci in Trading
Do You Think Fibonacci Numbers Are Useful in Investing? Some traders believe that since Fibonacci ratios describe geometric dynamics in the natural world well, they can also be […]
Derivatives
VIX – Volatility Index
An idea on how you can make extra profit by observing options. By extra profit, I mean a higher than expected profit, i.e., increasing profit without increasing risk. […]
Market Efficiency
α – Alpha, or Abnormal Return
This coefficient is used to measure the efficiency of an active trader. If a fund generates a higher return than predicted by CAPM, then it’s considered a good […]
Growth
Margin & Competition
The first symptom to look for when selecting stocks is… A histogram provided in 2016 in the United States shows the distribution of 12-month operational margins for 3577 […]
ROIC
ROIC & Competition
ROIC (Return on Invested Capital) is the most effective metric for evaluating a company’s competitiveness and for selecting investments. Business is such that high-profit margins are not necessarily […]
Market Efficiency
Cyclicals
Why Should We Avoid Investing in “Cyclicals” (As Peter Lynch Calls Them) and How to Identify Such Companies? The graph below presents two companies. As you can see, […]
WACC, CoC, Structure
Cost of Debt
To calculate the WACC, it is also necessary to know the cost of debt, and this is not simply the interest rate. Essentially, the interest rate and the […]
Market Efficiency
Bitcoin
Is Bitcoin Really an Asset Worth Rational Investment? Bitcoin can indeed be an asset that might accidentally make you rich, but is it worth rational investment? Bitcoin is […]