Staying with my life cycle theme, the most difficult part to navigate for both managers and investors is the "growing old" phase. I look at Intel and Walgreens facing that choice, and Starbucks feeling the middle age blues.
bit.ly/4cZeuIT
The market has turned sour on all three companies, as they have all delivered sub-par returns over the last 5 years. Hiring a new CEO seems to have brought some euphoria back at Starbucks, but is it overdone?
bit.ly/4cZeuIT

Nvidia's much-anticipated earnings report last week contained dazzling performance numbers and beat expectations, but Nvidia has dropped almost 17% since it came out. I look at the expectations game that may help explain the disconnect: bit.ly/3XyrwJ5 Deconstructing the earnings release, the company seems almost too good to be true: triple digit revenue growth (year-on-year), amazing unit economics and sustained economies of scale, but just not as good as they were last quarter. bit.ly/3XyrwJ5

On the day that Nvidia has the market's attention, and AI is the talk of the town, I look at the personal disruption (to you work and jobs) that is likely to come from AI, and what you can do to stay ahead of the game. bit.ly/3X7dXi8 Whether you want it or not, there is a bot out there with your name on it, that is conspiring to do your job for you. The threat is greater if your job is mechanical (vs intuitive), rules-based (vs principle-based) and leaves no room for judgment or bias. bit.ly/3X7dXi8

I do all my classroom teaching in the spring, but if you are interested in taking my classes, and have the time, I have free online versions of my core classes (corporate finance, valuation, investment philosophies) as well as lead in skillsets. bit.ly/3tPhYNA Clicking on the class links will take you to the webpage for each of the classes, and you can see what the classes will cover in detail. Check out a session or two, if you feel uncertain. bit.ly/3tPhYNA

Since the 2008 market crisis, when I realized that risk premiums change quickly during market crises, I have updated ERP for the S&P 500 monthly, and written annual updates on equity risk premiums and country risk. My 2024 country risk update is here. bit.ly/4fioWxx That paper is more than 100 pages long, and given your busy lives, it is unlikely that you will find the time to read it. I have a blog post that summarizes it here. bit.ly/3Sl9BTd

I like writing and I am verbose, an occupational hazard when time is your ally and you have a captive audience. Most of my books are long and stretch on forever, but my Little Book of Valuation (Wiley) is the exception. That 2011 edition is aging. I just finished an update, and the new edition is now available at booksellers (online or physical) near you. Much of the original material is intact, but the valuations have been updated with a new chapter on story telling. bit.ly/49y0kgd

As the market climbs, the implied ERP for the S&P 500 drops to 4.23%, its lowest value since 2008. As a forward-looking price of risk, the ERP drives everything in markets. I have a review that I do on ERP, and my fifteenth annual update is now available: bit.ly/49fSBU0
The paper is verbose (155 pages) and not riveting reading, but it does include everything I know about equity risk premiums and their estimation. My first update was written in 2009, during the financial crisis, and I have updated it annually since. bit.ly/49fSBU0

A data hack at 23andMe, a volcanic eruption in Iceland and a global pandemic are all catastrophes, the first to just one firm, the second to a country and the third to the world. I look at catastrophic risks, and how they play out in valuation and pricing. bit.ly/3SJi9Th As humans, we are not good at dealing with catastrophic risks, swinging between denial when it is dormant and panic when it is imminent. Living in a home on an earthquake fault, two blocks from the ocean, I am no exception. bit.ly/3SJi9Th

Seven stocks (Amazon, Apple, Alphabet, Meta, Microsoft, Nvidia, Tesla) added $5.1 trillion to their market cap in 2023, accounting for about 55% of the $9.2 trillion added during the year by all 6658 US firms. bit.ly/4bsNEcB
Going back a decade, these seven stocks have climbed from 8% of the value of all US firms to more than 24% of the value, with 2022 the only serious drawdown year. At a $12 trillion market cap, the Mag Seven are now worth more than all listed Chinese stocks. bit.ly/4bsNEcB

In my fifth data update for 2024, I look at the profitability of companies, scaled to both sales and invested capital, broken down by sector, region and corporate age. bit.ly/3Uo4mns There are multiple stakeholders in businesses, but we give shareholders primacy in businesses, not because we are playing favorites, but because they are only stakeholders whose claims are residual, not contractual. bit.ly/3Uo4mns

In my fourth data update for 2024, I look at risk, a central player in any discussion of business & investing, and examine how to measure it, why it varies across companies, countries & sectors and how it plays out in hurdle rates. bit.ly/48QlJ4O Finance has advanced the study of risk, but it has skewed too much to price-based measures & putting a number on risk more than recognizing how it affects investor psyche. Ultimately, risk is neither good nor bad. It is a pairing of danger & opportunity. bit.ly/48QlJ4O

In my second data update for 2024, I map out the surprisingly positive run that US equities had in 2023, delivering a 26% return for the year, beating the expectations of doom & gloom at the start of the year. bit.ly/41ZUx0T
That comeback for stocks, powered by beating low expectations leading into 2023, was uneven, with big differences in performance across sectors and seven stocks carrying a significant load. bit.ly/41ZUx0T

I will be teaching my valuation and corporate finance classes at NYU's Stern School of Business in the spring, and as always, you are welcome to join. You can virtually take the class, access the material and even take the exams. bit.ly/3O0xSfb If you are uncertain about whether you are ready for corporate finance and valuation classes, I have short classes on the three prerequisites for my classes -
Accounting:, Foundations of Finance: , Statistics: bit.ly/3RTcRUQ
bit.ly/3tGtg73
bit.ly/48vQWtV

It's Moneyball time! I am no Billy Beane (or Brad Pitt), but my 2024 data update is up and running, if you are interested. You can find both the most updated numbers as well as archived data here: 2024 number: Archived data: pages.stern.nyu.edu/~adamodar/New_…
pages.stern.nyu.edu/~adamodar/New_… As in prior years, my data universe includes all publicly traded companies that have a stock price greater than zero. That yields 47,698 companies, with industrials having the largest number of firms and technology the largest aggregated market cap. bit.ly/4aN0UZu

It is often common practice in private company appraisal to apply key person discounts to value. While key people are generally not valued explicitly in public companies, it is clear that they can affect value at large firms (Tesla, Berkshire, OpenAI) bit.ly/3RgY6uH The key person in a business may often be a founder or CEO, but key people can exist across the organization -a super sales person, a skilled scientist, a master designer or even an outside spokesperson or product designer. bit.ly/3RgY6uH

I don't own or drive a Tesla, and know far less about the company than the many Tesla bulls or bears who track its every move. That won't stop me from trying to value the company (again), as the stock price drops to $200. bit.ly/3tTnjDj I first valued Tesla in 2013, and have valued it every year since. I have been badly wrong on its value before, but I have learned about the company & have no regrets. Keep that in mind as you check out my latest attempt. bit.ly/3tTnjDj

Impact investments are investments made with the intent of generating benefits for society, alongside a financial return. Defined thus, its been around forever, but impact investing is now a business, with trillions to invest & diverse players. bit.ly/3trprSx
The balance between financial returns and social good varies across groups, with some groups (insurance companies, pension funds, for-profit funds) wanting their cake (risk-adjusted returns) and eating it too (doing good). bit.ly/3trprSx

The Birkenstock IPO could have an outsized effect on markets, as an indicator of whether risk capital is back. I use the company as a vehicle for valuing its multiple intangibles - brand name, celebrity customers, great management & even the Barbie buzz. bit.ly/48LJ9bJ Intangibles have always part of value - investors have always paid premiums for companies with great management and the nifty fifty stocks of the late 1960s had Coca Cola, McDonald's and Pfizer in the mix, all deriving significant value from intangibles. bit.ly/48LJ9bJ

As the third quarter of 2023 ends, I take a look at what it delivered to investors: a buoyant first six weeks, where stocks continued to rise, followed by six weeks where the mood turned darker. bit.ly/48BwxE1 Interest rates took center stage during the quarter. While short term treasuries leveled off, long term rates rose strongly, a reversal of the trends in the first half of the year. The 10-year and 30-year rates hit 15-year highs to end the quarter. bit.ly/48BwxE1

Is risk capital finally coming off the sidelines? ARM popped on its IPO last week, and Instacart opened at $42 (offer price of $30) today. My Instacart valuation came out just as the stock got listed, putting the value at about $29/share.bit.ly/3LvnCKF The Instacart business model is built around online grocery shopping (for pick-up or delivery), with revenues coming from transaction fees, subscriptions and advertising. Customers pay for time savings & convenience, but grocery stores face trade offs. bit.ly/3LvnCKF

After an unsettled summer, with an actor/writer strike entering its 3rd month, a Disney/Charter fight that blacked out the US open for many, and ongoing rumors of restructuring, a look at how streaming has changed the movie & broadcasting businesses. bit.ly/3rbCk2l The existential dread in many movie & broadcasting companies comes from remembering how music streaming (with Napster opening the door and Spotify & Pandora targeting weaknesses) devastated and remade the music business. bit.ly/3rbCk2l