Consilient Observer • 21-Dec-2020 | |
WACC and Vol
Michael Mauboussin, Dan Callahan
The weighed average cost of capital (WACC) and volatility (vol) generally move in lockstep, but 2020 is unusual because the cost of capital is well below its historical average and volatility is well above its historical average. The prime beneficiaries of these patterns are companies rich with real options. In this report, we define real options, discuss what businesses are likely to have them, review the valuation implications, and finish with a way to use real options analysis with traditional valuation.
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Consilient Observer • 15-Sep-2020 | |
One Job
Michael Mauboussin, Dan Callahan
The one job of an equity investor is to take advantage of gaps between expectations and fundamentals, which requires an understanding of the magnitude of investment and return on investment in order to properly anticipate free cash flows. With investments shifting more toward intangible assets, this report discusses the measurement and characteristics of intangible assets and reviews the implications of the growth of intangibles for investors.
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Consilient Observer • 09-Jun-2020 | |
The Math of Value and Growth
Michael Mauboussin, Dan Callahan
We show how corporate valuations change as we vary assumptions about growth, return on incremental invested capital, and the discount rate.
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Consilient Observer • 20-May-2020 | |
Myth Busting, Popular Delusions, and the Variant Perception
Michael Mauboussin, Dan Callahan
We address four myths or popular delusions in the investment industry.
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Consilient Observer • 20-Mar-2020 | |
BIN There, Done That
Michael Mauboussin, Dan Callahan
To improve your forecasting skills, try decreasing noise. Analyzing superforecasters reveals forecasters can be trained to more effectively update their views, reduce bias and reduce noise.
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