The Risk Premium Factor
A New Model for Understanding the Volatile Forces that Drive Stock Prices + Website
(Sprache: Englisch)
A radical, definitive explanation of the link between loss aversion theory, the equity risk premium and stock price, and how to profit from it The Risk Premium Factor presents and proves a radical new theory that explains the stock market, offering a...
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A radical, definitive explanation of the link between loss aversion theory, the equity risk premium and stock price, and how to profit from it The Risk Premium Factor presents and proves a radical new theory that explains the stock market, offering a quantitative explanation for all the booms, busts, bubbles, and multiple expansions and contractions of the market we have experienced over the past half-century.
Written by Stephen D. Hassett, a corporate development executive, author and specialist in value management, mergers and acquisitions, new venture strategy, development, and execution for high technology, SaaS, web, and mobile businesses, the book convincingly demonstrates that the equity risk premium is proportional to long-term Treasury yields, establishing a connection to loss aversion theory.
- Explains stock prices from 1960 through the present including the 2008/09 "market meltdown"
- Shows how the S&P 500 has consistently reverted to values predicted by the model
- Solves the equity premium puzzle by showing that it is consistent with findings on loss aversion
- Demonstrates that three factors drive valuation and stock price: earnings, long term growth, and interest rates
Understanding the stock market is simple. By grasping the simplicity, business leaders, corporate decision makers, private equity, venture capital, professional, and individual investors will fully understand the system under which they operate, and find themselves empowered to make better decisions managing their businesses and investment portfolios.aS, web, and mobile businesses, the book convincingly demonstrates that the equity risk premium is proportional to long-term Treasury yields, establishing a connection to loss aversion theory.
- Explains stock prices from 1960 through the present including the 2008/09 "market meltdown"
- Shows how the S&P 500 has consistently reverted to values predi
Written by Stephen D. Hassett, a corporate development executive, author and specialist in value management, mergers and acquisitions, new venture strategy, development, and execution for high technology, SaaS, web, and mobile businesses, the book convincingly demonstrates that the equity risk premium is proportional to long-term Treasury yields, establishing a connection to loss aversion theory.
- Explains stock prices from 1960 through the present including the 2008/09 "market meltdown"
- Shows how the S&P 500 has consistently reverted to values predicted by the model
- Solves the equity premium puzzle by showing that it is consistent with findings on loss aversion
- Demonstrates that three factors drive valuation and stock price: earnings, long term growth, and interest rates
Understanding the stock market is simple. By grasping the simplicity, business leaders, corporate decision makers, private equity, venture capital, professional, and individual investors will fully understand the system under which they operate, and find themselves empowered to make better decisions managing their businesses and investment portfolios.aS, web, and mobile businesses, the book convincingly demonstrates that the equity risk premium is proportional to long-term Treasury yields, establishing a connection to loss aversion theory.
- Explains stock prices from 1960 through the present including the 2008/09 "market meltdown"
- Shows how the S&P 500 has consistently reverted to values predi
Klappentext zu „The Risk Premium Factor “
A radical, definitive explanation of the link between loss aversion theory, the equity risk premium and stock price, and how to profit from itThe Risk Premium Factor presents and proves a radical new theory that explains the stock market, offering a quantitative explanation for all the booms, busts, bubbles, and multiple expansions and contractions of the market we have experienced over the past half-century.
Written by Stephen D. Hassett, a corporate development executive, author and specialist in value management, mergers and acquisitions, new venture strategy, development, and execution for high technology, SaaS, web, and mobile businesses, the book convincingly demonstrates that the equity risk premium is proportional to long-term Treasury yields, establishing a connection to loss aversion theory.
* Explains stock prices from 1960 through the present including the 2008/09 "market meltdown"
* Shows how the S&P 500 has consistently reverted to values predicted by the model
* Solves the equity premium puzzle by showing that it is consistent with findings on loss aversion
* Demonstrates that three factors drive valuation and stock price: earnings, long term growth, and interest rates
Understanding the stock market is simple. By grasping the simplicity, business leaders, corporate decision makers, private equity, venture capital, professional, and individual investors will fully understand the system under which they operate, and find themselves empowered to make better decisions managing their businesses and investment portfolios.
Knowing what to look for in the stock market can give you a competitive edge, but understanding the system itself-right down to the booms, busts, and bubbles of the past half-century-changes everything.
In The Risk Premium Factor: A New Model for Understanding the Volatile Forces That Drive Stock Prices, Stephen D. Hassett presents a radical new theory-the "factor" that explains theentire stock market, providing a definitive link between loss aversion theory, the equity risk premium, and stock price, and shows how you can make the most of the connection.
Where others have tried and failed to find a link between loss aversion and the processes that control how investors set prices in the stock market, The Risk Premium Factor succeeds. Demonstrating that the equity risk premium is proportional to long-term Treasury yields, the book establishes for the first time a quantitative connection between loss aversion and equity risk premium.
This remarkable new concept can be used to explain stock prices from 1960 through to the present day, including the 2008 financial meltdown, not through theories and simulations, but with historical data that bear out the truth. It shows how the S&P 500 has consistently reverted to predicted values and solves the equity premium puzzle by showing that it is consistent with findings on loss aversion. Putting you back in the driver's seat when it comes to investing, the book clearly demonstrates the stock market's reptilian-like response to three factors drive valuation and stock price: earnings, long-term growth, and interest rates. This book also includes a companion website with historical data, calculators, and links to additional apps and readings.
Dispelling the notions that the stock market is a mysterious arbiter of value, when, in fact, it is easy to understand the Risk Premium Factor Valuation Model is a game-changer for anyone who works in investments-from professional investors to corporate decision makers to private individuals. After all, if you don't understand how the market values businesses, you don't really understand the market at all.nd simulations, but with historical data that bear out the truth. It shows how the S&P 500 has consistently reverted to predicted values and solves the equity premium puzzle by showing that it is consistent with findings on loss aversion. Putting you back in the driver's seat when it comes to investing, the book clearly demonstrates the stock market's reptilian-like response to three factors drive valuation and stock price: earnings, long-term growth, and interest rates. This book also includes a companion website with historical data, calculators, and links to additional apps and readings.
Dispelling the notions that the stock market is a mysterious arbiter of value, when, in fact, it is easy to understand the Risk Premium Factor Valuation Model is a game-changer for anyone who works in investments-from professional investors to corporate decision makers to
In The Risk Premium Factor: A New Model for Understanding the Volatile Forces That Drive Stock Prices, Stephen D. Hassett presents a radical new theory-the "factor" that explains theentire stock market, providing a definitive link between loss aversion theory, the equity risk premium, and stock price, and shows how you can make the most of the connection.
Where others have tried and failed to find a link between loss aversion and the processes that control how investors set prices in the stock market, The Risk Premium Factor succeeds. Demonstrating that the equity risk premium is proportional to long-term Treasury yields, the book establishes for the first time a quantitative connection between loss aversion and equity risk premium.
This remarkable new concept can be used to explain stock prices from 1960 through to the present day, including the 2008 financial meltdown, not through theories and simulations, but with historical data that bear out the truth. It shows how the S&P 500 has consistently reverted to predicted values and solves the equity premium puzzle by showing that it is consistent with findings on loss aversion. Putting you back in the driver's seat when it comes to investing, the book clearly demonstrates the stock market's reptilian-like response to three factors drive valuation and stock price: earnings, long-term growth, and interest rates. This book also includes a companion website with historical data, calculators, and links to additional apps and readings.
Dispelling the notions that the stock market is a mysterious arbiter of value, when, in fact, it is easy to understand the Risk Premium Factor Valuation Model is a game-changer for anyone who works in investments-from professional investors to corporate decision makers to private individuals. After all, if you don't understand how the market values businesses, you don't really understand the market at all.nd simulations, but with historical data that bear out the truth. It shows how the S&P 500 has consistently reverted to predicted values and solves the equity premium puzzle by showing that it is consistent with findings on loss aversion. Putting you back in the driver's seat when it comes to investing, the book clearly demonstrates the stock market's reptilian-like response to three factors drive valuation and stock price: earnings, long-term growth, and interest rates. This book also includes a companion website with historical data, calculators, and links to additional apps and readings.
Dispelling the notions that the stock market is a mysterious arbiter of value, when, in fact, it is easy to understand the Risk Premium Factor Valuation Model is a game-changer for anyone who works in investments-from professional investors to corporate decision makers to
Inhaltsverzeichnis zu „The Risk Premium Factor “
- List of Figures- List of Tables
- Preface
- Evolution of a Theory
- Overview
- How This Book Is Structured
- As You Begin
- Acknowledgments
- About the Author
Chapter 1: Understanding the Simplicity of Valuation
- Rates, Compounding and Time Value
- Why Time Value Matters for the Stock Market
- Valuing a Perpetuity
- Constant Growth Equation: The Key to Understanding the Stock Market
- Not the First to Try This
- Why Growth Rate and Cost of Capital Matter
- P/E Ratio Expansion and Contraction
- CAPM, Risk Premium and Valuation
- Equity Risk Premium
- Impact of Risk Premium on Valuation
Chapter Recap
- Part I: Exploring the Risk Premium Factor Valuation Model
Chapter 2: The Risk Premium Factor Valuation Model
- The RPF Model is Simple, but Does it Work?
- Estimating the Risk Premium Factor (RPF)
- Potential Causes for Shifts in the Risk Premium Factor
- Potential Weaknesses in RPF Theory and Methodology
- Adjusted Risk Free Rate
- Comparison to the Fed Model
Chapter Recap
Chapter 3: Solving the Equity Premium Puzzle
- The Link to Loss Aversion
- Loss Aversion
- Loss Aversion and Corporate Decision Making
- Attempts to Solve the Equity Premium Puzzle
- Impact of Inflation on Value
- Back to Loss Aversion
- Our Reptilian Brain
Chapter Recap
Chapter 4: The RPF Model and Major Market Events from 1981-2009
- Efficient Market Hypothesis
- How the RPF Valuation Model Explains Black Monday
- 2000 "Dot Com" Bubble: RPF Model Suggests Significant Bubble for the S&P 500
- How the RPF Valuation Model Explains 2008-2009 Meltdown and Recovery
- Markets Mostly Efficient and Rational, But Prone to Mistakes
Chapter Recap
- Part II: Applying the Risk Premium Factor Valuation Model
Chapter 5: Application to Market Valuation
- Beware of Interest Rates
- Example: Application to the Market in Late September 2009
- Why the Source of Growth Matters
Chapter Recap
Chapter 6: Risk Adjusted Real Implied Growth Rate (RIGR)
- Analyzing
... mehr
Individual Companies with RIGR
- RIGR Analysis of Apple and Google Pre-Earnings Announcement
Chapter Recap
Chapter 7: Valuing an Acquisition or Project
- Brief Introduction to Valuing an Acquisition or Project
- Translating Your World View into Numbers
- Setting the Cost of Capital
- Example: Utility Acquiring a Risky Asset
- Selecting the Investment Forecast Time Horizon
- The All Important Terminal Value
Chapter Recap
Chapter 8: Case Study #1 - Valuation of a High Growth Business
- Calculating Enterprise Value and Stock Price
- Scenario Analysis
Chapter Recap
Chapter 9: Case Study #2 - Valuation of a Cyclical Business
Chapter Recap
Chapter 10: Using the RPF Model to Translate Punditry
- The varied voices of columnists, writers and sources in financial media are often confusing. This chapter summarizes a selection of recent articles from the financial press and analyzes them through the lens of the RPF Model
- Read Carefully Then Analyze
- What Have I Got to Lose?
- Beware of Oversimplification
- Confusing Headlines and Misguided Blame
- Almost Nailed It
- Graham and Dodd
- The Wrong Discussion
- Dumb Money and Bubbles
- The Right Discussion
Chapter Recap
Chapter 11: Using the RPF Model for Investment and Business Strategy
- Estimating Fair Value: How to Identify and Exploit Bubbles
- Beware of RPF Shifts
- Investing in Individual Companies
- How to Apply the RPF Model to Day-to-Day Business Decisions
- Capital Structure and Risk Impact Cost of Capital
- Opportunistic Adjustments to Corporate Capital Structure
- Creating a Sense of Urgency
- Avoiding Value Destruction
- Value Creation
- Key M&A Valuation Concepts
- Inflation is the Enemy of Value
- Final Thoughts
- Appendix A: Mobile Apps: The Wave of the Past
- Appendix B: Technology on the Horizon: What if Moore's Law Continues for Another 40 Years?
- Glossary
- Notes
- About the Companion Website
- Indexost Nailed It
- Graham and Dodd
- The Wrong Discussion
- Dumb Money and Bubbles
- The Right Discussion
Chapter Recap
Chapter 11: Using the RPF Model for Investment and Business Strategy
- Estimating Fair Value: How to Identify and Exploit Bubbles
- Beware of RPF Shifts
- Investing in Individual Companies
- How to Apply the RPF Model to Day-to-Day Business Decisions
- Capital Structure and Risk Imp
- RIGR Analysis of Apple and Google Pre-Earnings Announcement
Chapter Recap
Chapter 7: Valuing an Acquisition or Project
- Brief Introduction to Valuing an Acquisition or Project
- Translating Your World View into Numbers
- Setting the Cost of Capital
- Example: Utility Acquiring a Risky Asset
- Selecting the Investment Forecast Time Horizon
- The All Important Terminal Value
Chapter Recap
Chapter 8: Case Study #1 - Valuation of a High Growth Business
- Calculating Enterprise Value and Stock Price
- Scenario Analysis
Chapter Recap
Chapter 9: Case Study #2 - Valuation of a Cyclical Business
Chapter Recap
Chapter 10: Using the RPF Model to Translate Punditry
- The varied voices of columnists, writers and sources in financial media are often confusing. This chapter summarizes a selection of recent articles from the financial press and analyzes them through the lens of the RPF Model
- Read Carefully Then Analyze
- What Have I Got to Lose?
- Beware of Oversimplification
- Confusing Headlines and Misguided Blame
- Almost Nailed It
- Graham and Dodd
- The Wrong Discussion
- Dumb Money and Bubbles
- The Right Discussion
Chapter Recap
Chapter 11: Using the RPF Model for Investment and Business Strategy
- Estimating Fair Value: How to Identify and Exploit Bubbles
- Beware of RPF Shifts
- Investing in Individual Companies
- How to Apply the RPF Model to Day-to-Day Business Decisions
- Capital Structure and Risk Impact Cost of Capital
- Opportunistic Adjustments to Corporate Capital Structure
- Creating a Sense of Urgency
- Avoiding Value Destruction
- Value Creation
- Key M&A Valuation Concepts
- Inflation is the Enemy of Value
- Final Thoughts
- Appendix A: Mobile Apps: The Wave of the Past
- Appendix B: Technology on the Horizon: What if Moore's Law Continues for Another 40 Years?
- Glossary
- Notes
- About the Companion Website
- Indexost Nailed It
- Graham and Dodd
- The Wrong Discussion
- Dumb Money and Bubbles
- The Right Discussion
Chapter Recap
Chapter 11: Using the RPF Model for Investment and Business Strategy
- Estimating Fair Value: How to Identify and Exploit Bubbles
- Beware of RPF Shifts
- Investing in Individual Companies
- How to Apply the RPF Model to Day-to-Day Business Decisions
- Capital Structure and Risk Imp
... weniger
Autoren-Porträt von Stephen D. Hassett
STEPHEN D. HASSETT is a corporate development executive with Sage North America, a subsidiary of The Sage Group plc, a leading global supplier of business management software and services. He has published in the Journal of Applied Corporate Finance and is a regular contributing author for the Seeking Alpha investment website. Previously, he was an executive at the Weather Channel, software entrepreneur and consultant with Stern Stewart & Co. He holds an MBA from the Darden School of Business at the University of Virginia.
Bibliographische Angaben
- Autor: Stephen D. Hassett
- 2011, 1. Auflage, 208 Seiten, Maße: 15,7 x 23,5 cm, Gebunden, Englisch
- Verlag: Wiley & Sons
- ISBN-10: 1118099052
- ISBN-13: 9781118099056
- Erscheinungsdatum: 18.11.2011
Sprache:
Englisch
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