There will be blood might have been an excellent movie on Oil and Greed, however, the recent equity turmoil, especially in the US, is nothing about Oil. The US after decades again has become oil surplus and would be a major exporter of oil this year if I am not mistaken. Continue reading “And then there will be blood? Rise of TED Spreads”
It seems the underlying idea of funding in the Infrastructure bill proposed by President Trump is based on Pareto Principle. The proposal caps funding by federal government to 20% and requires states, cities, and municipalities to fund the remaining 80%. In terms of business parlance, Pareto Principle implies that 80% of the business comes from 20% of clients.
The only problem with this rule is that it should have been implemented the other way. The funding of the infrastructure project should have been 80% by the federal government and the rest from the cities etc. Continue reading “Who is going to fund Infrastructure Bill ?”
Kurtosis is a measure used in statistics to measure weight in the tails. A normal curve with a mean of zero has a kurtosis of 3. Kurtosis in simple terms measures outliers in a distribution of data sets. Continue reading “Kurtosis: Are you an outlier?”
Equities around the world fell last week. I had mentioned in my earlier articles that equities especially S&P 500 are expensive based on Case-Schiller Index. Over the next few months, equity markets around the world will be very volatile. I feel more correction is set to come in. Case Schiller (CAPE ratio: Cyclically Adjusted PE ratio) calculates price earnings ratio of inflation-adjusted earnings of previous 10 years. Continue reading “Equities: Way Forward”
This article discusses investment philosophy of endowment funds especially super endowment funds like Yale and Harvard. Continue reading “Alternatives: Investment Style of Yale and Harvard Endowment Funds”
This was originally published sometime back by myself on LinkedIn. The genesis of this article is when I took upon myself to value a highly cyclical company during my month-long internship with a small startup. To value cyclical companies is very difficult with uneven cash flows and the valuation here relies a lot on assumptions. Continue reading “Curious Case of Discount Cash Flow Modeling for Cyclical Companies”
The FED recently came out with a plan to cut the asset size of its balance sheet. This article looks into the bond market with some interesting and insightful facts about the bond market. The credit crisis took its severe toll in 2008 and Ben Bernanke, whose Ph.D. dissertation was on 1929 recession articulated that the best way to avoid a severe recession in the market was to allow credit to move into the market. FED primarily regulates the liquidity within the system through the change in FED rate. FED rate is the rate at which banks are willing to other banks or financial institutions overnight without any collateral. Depository institutions especially banks have to conform to a minimum reserve ratio according to latest Basel III norms and manage the minimum threshold through the overnight lending mechanism. Source:Federalreserve.gov Continue reading “FED…Bond Markets…A Primer”