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Investing and Valuation Lessons from the Renaissance
I just got back a few days ago from a two-week family holiday in Italy, where we spent the bulk of the second week in Florence, which we used as a springboard to see Tuscany. I kept away from work...
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The Ride Sharing Business: Is a Bar Mitzvah moment approaching?
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The Bonfire of Venture Capital: The Good, Bad and Ugly Side of Cash Burn!
In my last post on Uber, I noted that it was burning through cash and that this cash burn, by itself, is neither unexpected nor a bad sign. Since I got quite a few comments on what I said, I decided to...
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Superman and Stocks: It's not the Cape (CAPE), it's the Kryptonite(Cash flow)!
Just about a week ago, I was on a 13-hour plane trip from Tokyo to New York. I know that this will sound strange but I like long flights for two reasons. The first is that they give me extended...
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Mean Reversion: Gravitational Super Force or Dangerous Delusion?
In my last post on the danger of using  single market metric to time markets, I made the case that though the Shiller CAPE was high, relative to history, it was not a sufficient condition to conclude...
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The School Bell Rings! It's Time for Class!
As most teachers do, I mark time in academic rather than in calendar years and as September dawns, it is New Year's eve for me and a new class is set to begin. In just under a week, on September 7,...
View ArticleLazard, Evercore and the TSLA/SCTY Deal: Keystone Kops or Crafty Bankers?
It is get easy to get outraged by events around you, even when that outrage is not merited. I have learned, through hard experience, that writing when outraged can be cathartic but it can also be...
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Keystone Kop Valuations: Lazard, Evercore and the TSLA/SCTY Deal
It is get easy to get outraged by events around you, but I have learned, through hard experience, that writing when outraged is dangerous. After all, once you have climbed onto your high horse, it is...
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Fairness Opinions: Fix them or Get Rid of them!
My post on the Tesla/SCTY deal about the ineptitude and laziness that Lazard and Evercore brought to the valuation process did not win me any friends in the banking M&A world. Not surprisingly, it...
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Venture Capital: It is a pricing, not a value, game!
Venture capitalists (VCs) don’t value companies, they price them! Before you explode, implode or respond with righteous indignation, this is not a critique of what venture capitalists do, but a...
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Deutsche Bank: A Greek Tragedy at a German Institution?
This may be a stereotype, but the Germans are a precise people and while that precision often gets in the way of more creative pursuits (like cooking and valuation), it lends itself well to engineering...
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Myth 4.1: If you don't like betas (or modern portfolio theory),you cannot do...
Let’s start by stating the obvious. You need a D(iscount rate) to do D(iscounted) C(ash) F(low) valuation. To get that discount rate, I use a beta to estimate a cost of equity (and cost of capital)...
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Myth 4.2: It's all about D in the DCF
If you have taken a class on valuation, think back to what you spent most of your time doing and I will wager you spent it talking about discount rates. If there was any attention paid to cash flows...
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Myth 4.3: The D cannot change (over time) in a DCF
In my last post, I argued that academics and practitioners pay too much attention to discount rates in valuation and too little to cash flows. One reason for that attention may by the fear that you...
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Myth 4.4: The D(discount) rate is a receptacle for your hopes and fears
In discounted cash flow valuation, discount rates are the instruments that we use to adjust for the risk in cash flows. In practice, discount rates often take on a far greater role. Some analysts use...
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Myth 4.5: DCFs break down with near-zero risk free rates!
In any version of a risk and return model for discount rates, where you start with a riskfree rate as a base and build up to costs of equity, debt and capital, it seems blindingly obvious that as...
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The Trump Effect on Markets: A Financial (not a Political) Analysis!
I have political views, but I try to keep them out of my classes and my blog posts. I teach and write about corporate finance/valuation, not political science, and I don't think it is fair to subject...
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Family Feuds: The Promise and Peril of Family Group Companies!
I teach a corporate finance class, a class that I describe as big-picture (since it covers every aspect of business), applied and universal in its focus. I use six firms, ranging the spectrum from...
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Faith, Feedback and Fear: Ready for the Valeant Test?
It is easier and more fun to write about your winners than your losers, but it is also far more important and valuable to revisit your losers, where the story has not played out the way you hoped it...
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Myth 5.1: If you don't believe in forever, you cannot do a DCF
If you are not interested in intrinsic valuation and feel that discounted cash flow valuation (DCF) is a waste of your time, you may want to skip these next few posts, which continue a series that I...
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