Brent Wheeler has used economic analysis to drive successful investment and governance in the public and private sector for the last 29 years. Typically with an ........ eye2thelongrun

The Many Windows on Reality

19th July 2019

Politicians of all hues have a disturbing and dangerous habit of declaring "there is only one story– you need to believe it and its “mine” and here’s “the” way to fix it”

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Strong Governance = punching above your weight

18th July 2019

The Power of Governance and the Costs of Introverted Chaos


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Road Death Stats

5th June 2019

Road Death Stats

Context - how far we are travelling - is important in interpreting road tolls

Sowell Says

4th June 2019

Some wisdom from Thomas Sowell:

Those who are always accusing people in the private sector of “greed” almost never accuse government of greed, no matter what it does.

— Thomas Sowell (@ThomasSowell) 

Unusual US Equities Premium ? Or is it in NZ ?

3rd May 2019

From early on in our finance education students of CAPM are taught that the equities premium for the US is about 6%. In truth no one is 100% sure why. Bennett Stewart once wrote that the magic " 6 " was a bit like 22 over 7... or Pi. Just one of those numbers.

Aswath Damodaran - a grinding and inspired worker in this area - today published data showing the current (May2019) US premium to be around 5.62... up from 5.16 12 months ago. Damodaran uses the opyion method to estimate the premium which has the advantage of being forward looking and not just being a crude history re-run.

With the US riskfree rate down around 2.5 this makes the cost of capital some 8.12 (on average and for the S&P 500) in the US. Applied in an NZ context we might say the cost of capital is around 7.4 given the NZ rate for Rf.

Is the risk to be offset really that much lower in NZ ? If so why aren't we sprinting...?

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