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...

Read More

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...

Read More

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, discoun...

Read More

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 flow...

Read More

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 dis...

Read More

Myth 4.1: If you don't like betas (or modern portfolio theory),you cannot do a DCF!

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 ...

Read More