“The ratio has certain limitations in telling you what you need to know. Still, it is probably the best single measure of where valuations stand at any given moment.” — Warren Buffett, 2001 Saudi Arabia’s stock market capitalization jumped from about 100% of GDP to an astonishing 300% on 11 December 2019. Had the stock prices of the country’s listed … Read More

Key Points A Kuwaiti property company’s IPO in the 2007 real estate boom highlights the sensitivity of DCF models to key assumptions. Interest rates significantly influence company valuations, with lower rates leading to higher valuations. Contrary to expectations, there is no linear relationship between low yields and high P/E ratios. The 150-year observation period shows little correlation between interest rates … Read More

The capitalization-to-GDP ratio of the stock market, often referred to as the Buffett Indicator, compares the size of the equity markets to the overall economy. Considering that corporate sector growth is tied to economic growth, these two components are expected to move in tandem over the long term. Key Points The Buffett Indicator has shown a continual upward trend over … Read More

Key Points The GameStop saga has sparked a focus on the distinctions between investing, speculation, and gambling. There is concern about whether the influx of new market participants will democratize markets or create a new class of “entertainment” investors. Trust in financial markets is significantly influenced by the presence of a trusted adviser. Just days after the release of the … Read More

As the world grapples with the challenges of lockdowns and economic uncertainty, the concept of on-demand pay, also known as Employer Salary Advance Schemes (ESAS), has gained significant traction. This has been driven by the need for timely access to funds and the increasing reliance of workers on alternative financial solutions to bridge the gap between paydays. The key benefit … Read More

Key Points: Natural resources are often undervalued and seen as infinite, leading to overexploitation and environmental damage. There is a lack of empirical connection between corporate social performance and financial performance, leading to little motivation for companies to prioritize environmental conservation. Pricing nature assets and assigning a monetary value to ecosystem services can incentivize companies to adopt more responsible practices. … Read More

– Assessments of a company’s trustworthiness are crucial for investors. – Time and resource constraints make it challenging to thoroughly evaluate companies through traditional methods. – Trusting your gut instincts is not a reliable way to detect fraud or deception. – Auditors’ techniques focus mainly on numerical data and may not capture text-based information. – Natural language processing (NLP) can … Read More

In Bernoulli’s thought experiment, a rich prisoner valued money differently than a poorer man due to his specific objective of buying his freedom Goals-based portfolio theory can be used to evaluate investments based on their alignment with an investor’s objectives Different investors with different goals and time horizons may be willing to accept different returns for the same security The … Read More

Transparent impact metrics are becoming increasingly important for sustainable investment capital. Impact-Weighted Accounting (IWA), championed by Sir Ronald Cohen, is a standardized accounting methodology for measuring impact. Quantifying risk, inputting return, and measuring impact are the three components of the Sustainable Investment Trinomial. IWA translates social and environmental impact into monetary units, allowing for better assessment of corporate performance. Over … Read More