Welcome the Uncertainty

Prof Aswath damodaran is an authority on Corporate Finance, sharing his latest post where he defines why we should welcome the blogUncertainty. If you can value companies early in the life cycle, you cannot do so with any degree of confidence. I concede that point, but that is exactly why I would try to value them!

I know that statement makes little sense, but to solidify my argument, take a look at the following list of five assets/entities and rank them on the basis of the confidence you will feel in valuing each one.     Continue reading “Welcome the Uncertainty”

Simplifying the Yield curve

I do not know why but somebody wanted me to define some basics on Yield spreads, that whether Yield spreads can nick-leesonjudge the risk environment in an economy ?

Yield spreads are good tools to judge the risk environment in an economy a lower yield spread means that the issuer of debt is in a situation to demand loans at a lower spread above the yield of government security which in turn shows the presence of ample liquidity.

As far as economic growth is concerned a lower yield spread indicates greater amount of liquidity available for growth and entrepreneurial practices as well as a negative impact on the front of inflation. Continue reading “Simplifying the Yield curve”

Economic equilibrium

So is it a source of controversy…on one hand you have some econ critics who say “Econ models wrongly assume that the imageseconomy is always in equilibrium,” and on the other hand you have economists responding that “No, economics models are defined to always be in equilibrium.”

“Equilibrium” can mean many different things.

There are many different types of equilibria in economics. This may sound intellectually dishonest, but it’s not; the same is true in biology, physics, or any other science. “Equilibrium” just means “balance”, and there are lots of different kind of things that can balance. In fact, any equation you write down that isn’t true by definition can be interpreted as an “equilibrium” relationship, or “equilibrium condition” – the equation is simply a statement that whatever’s on the left-hand side of the equation is balanced with whatever’s on the right-hand side. Continue reading “Economic equilibrium”

BITCOIN – The buzz

BITCOIN has been the buzz word these days after the crisis . What in the world is a BITCOIN?”images
Let’s start by looking at our current monetary system. In most countries, a small tiny banking elite exercises total control over that nation’s money supply. And we’re just supposed to trust them to be good guys.

Yet central bankers around the world have conjured trillions of dollars out of thin air, debasing the money’s value. It’s a concept any six-year old can understand. If money grew on trees, it wouldn’t be worth very much.
This is one of the key reasons why people buy gold. You can’t just conjure gold out of thin air. It takes years of exploration and investment to pull it out of the ground. In the information age, though, we have an alternative. Continue reading “BITCOIN – The buzz”

Why Gold Is Falling

One of my good friend asked why gold is falling ? Before responding I have 2 assumptions in mind :-images

  •  Gold investing is purely psychological. There is no real value in gold, other than its value as a conductor in electronics, etc. So all gold investing is pure game theory, its purely something that has no meaning, into which the only reason to invest is the belief that other people will do the same, for no reason other than their belief that other people will do the same…
  • Gold obtains valuation through a multitude of factors: scarcity, comparative value,
    Continue reading “Why Gold Is Falling”