Blog Posts

MOIC, or Multiple on Invested Capital, is a metric that tracks investment returns. It does so by comparing the value of an investment on the exit date with the initial investment amount. This metric is particularly prevalent in the private equity industry, where it’s used to monitor a fund’s investment performance and benchmark returns across […]

The concept of Present Value of Growth Opportunities (PVGO) can play a role in financial analysis and decision-making. PVGO provides a means of quantifying the value today of a company’s future growth prospects. This helps traders/investors determine if a company is undervalued or overvalued based on its future growth potential.   Key Takeaways – PVGO […]

Factor risk models are used by traders and investors who need to estimate the relationship and riskiness of securities. These tools are especially helpful in building the covariance matrix of assets in a portfolio. Essentially, the covariance matrix measures the movements of returns from different assets and how they correspond with one another. This information […]

The Grinold and Kroner model – sometimes known as the Grinold-Kroner or G-K model – is a financial theory that provides a formula to calculate the expected return on a stock or a stock market index over an asset without credit risk. The model was developed by Richard C. Grinold and Kenneth F. Kroner and […]

Auction Market Theory (AMT) provides one perspective on how financial markets operate, essentially functioning as giant auction houses. The continual interaction of buying and selling pressure determines price movements. This approach, when applied in financial markets, considers every bid as an attempt to buy and every offer as an attempt to sell.   Key Takeaways […]

The US Housing Bubble and the subsequent Financial Crisis of 2007-08 was a period characterized by a drop in housing prices and other assets, which subsequently led to a severe global economic recession that threatened to become a depression with interest rates hitting zero. The crisis was the worst financial disaster since the Great Depression […]

The Dot-Com Bubble, which took place from 1995 to 2001, is often used as a textbook example of a speculative bubble. A speculative bubble occurs when the price of an asset, in this case tech stocks, significantly surpasses their intrinsic value. The era was marked by a rapid rise in equity markets fueled by investments […]

In the late 1990s, the Asian Financial Crisis swept through several East Asian nations, causing an economic downturn that was felt globally. The crisis began in Thailand in 1997 with the collapse of the Thai baht, following the decision by the government to unpeg the currency from the US dollar. It then rapidly spread to […]

The financial world was shaken on October 19, 1987, a day that is infamously known as Black Monday. The largest one-day percentage drop in the history of the Dow Jones Industrial Average occurred, shedding 22.6% of its value in a single day. This day marked a significant event in financial history, drawing global attention to […]

The Savings and Loan (S&L) crisis of the 1980s and early 1990s is a period of widespread banking failures in the US. It was a disaster that led to the failure of nearly a third of the 3,234 savings and loan associations in the United States between 1986 and 1995.   Failures of all Institutions […]