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But the numbers you can’t argue with, I mean, we all know that the brutal math of investing before costs investors collectively will earn the market return after costs. And so, you know, that’s why I’ve started to distribute money to them. They will earn that market return less, whatever they’re paying.
Sander Gerber : Well, actually I was good at math. In other words, the models assume a normal distribution of returns, but when you get into some kind of event, it’s no longer a normal distribution returns. That’s a barbell distribution. As opposed to normal distribution. What was the career plan?
They use several valuation metrics to know more about the company. And when used for ROE, as per the basic rule of math, if the denominator decreases, the fraction as whole increases i.e, It manufactures and distributes pharmaceuticals bulk drugs called rifampicin. One such important measure is Return on Equity (ROE).
However, the universe typically does not follow a normal distribution, not even on a one-year basis. We all know that a 55% hit rate is the top decile across the industry, and the maths above demonstrates why. Both types of error are due to a combination of either mis-assessing the business quality or its valuation (or both).
It was about $170 million valuation. So here’s the math, Barry. If you have seven $50 incremental year, then every 10 year old in America, when they enter into the fifth or sixth grade and the teacher says, Hey, today we’re gonna talk about math or compounding or stocks or capitalism, they’ll say, open up.
And I did the math, and I think at that point in time, roughly speaking, assets in ETS were roughly just 10 percent, 12 percent of assets in mutual funds and I was pretty convinced that that number was to increase significantly. I remember telling myself, why would anyone invest in mutual funds when you can buy an ETF instead?
00:03:14 [Mike Greene] So that was actually an outgrowth from my experience coming out of Wharton and you mentioned the, the, you know, the transition of people who tended to be skilled at math or physics into finance. We built a company that was focused on valuation, initially, actually targeting corporate strategic planning departments.
DAVIS: Where international equities, because of valuations, probably 7% to 7.5%. RITHOLTZ: So let’s talk about that, because that gap in valuation has persisted for a long time. How durable is that shift, given how large that gap has gotten in valuation between US stocks and the rest of the developed world?
So I took it upon myself to go off and took a course in bond math, took another course in derivatives and realized the underlying fundamental concepts were barely, I mean, it wasn’t even high school math in most cases. I didn’t know what any of these terms meant. Three main client segments.
From a legacy planning standpoint, two distinctions are especially important: Roth IRAs do not require their owners or spouses to take mandatory distributions. In contrast, traditional IRAs impose mandatory withdrawals, called “Required Minimum Distributions” or “RMDs” beginning at age 70½.
From a legacy planning standpoint, two distinctions are especially important: Roth IRAs do not require their owners or spouses to take mandatory distributions. In contrast, traditional IRAs impose mandatory withdrawals, called “Required Minimum Distributions” or “RMDs” beginning at age 70½.
I got the sense that, so Churnin takes 51% for a fairly modest valuation, 10 or $15 million. So when I got there, we really set about exploding the amount of content that we made and then to be able to distribute it very, very rapidly. That, that gives Barstool a half a billion dollar valuation. Three subsequent sales in 2020.
So I, I did a math degree at Oxford, which is more pure math. You know, pure math can be very theoretical and detached from the real world, and it’s getting worse. And what you get at the end is a very, very uneven distribution of wealth. And I see the opposite fathead long tail distribution in capitalism.
I’m good at math and science and you know, I always had an idea what go into business, but I felt that electrical engineering would be a good foundation. You know, I, it always, I I see different numbers all the time, so it’s always kinda like, who’s math if you will? 00:02:16 [Speaker Changed] Me too.
But thankfully, the next decade, things really accelerated in terms of the growth of the company and growth in the valuation, things like that. The math never seems to work out. So that first wave of innovation of the Internet was regionally distributed. Sprint, another communications company was in Kansas City.
And we’ve automated the, the appraisal process for valuation, both intrinsic value, meaning like, where would we pay it, where would we buy it, and where is the fair market price that asset from that level, from price and from consumer behavior now. We’ve gathered up all the information you would need to do an appraisal.
I’m kind of in intrigued by the idea of philosophy and math. So I found myself getting kind of bored with my math problem sets, and then I could shift to philosophy and then go back and forth. And one of the worst performing factors has been valuation. And I think that’s wrong because valuation does matter.
But plenty of valuation measures, it has no applicability for price-to-sales. ASNESS: Well, first of all, I’m going to somewhat disappoint you saying we do not take very big bets on views like timing asset classes based on valuation. My mom was a math teacher so — RITHOLTZ: Okay. It can apply to earnings.
Literally the first check-in to Robinhood, which went public in 2021 at about a $34 billion valuation. We’re just distributing our video across a hundred of these YouTube channels. RITHOLTZ: He was the first (inaudible) in round B at the higher valuation. Is it about the valuation? YouTube’s getting sued.
00:24:49 [Speaker Changed] So let’s talk a little bit about valuation in the public markets. Does that valuation difference in the public markets extend to private markets as well? Does that valuation difference in the public markets extend to private markets as well? Hence the valuation gap.
And I, and I really like the application of math and statistics and computer science to markets. You learn the math that can help you with, with market making operations. It’s just not smart on a math basis to do that. And I just caught the bug. Become options market makers. You learn the technology.
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