Aswath Damodaran finds the equity premium has risen to 6%—in the top decile historically. He estimates shocks from 2 of the following have already been priced in: • Slower growth • Political/economic crisis • Higher interest rates • ... Read More
New Study Shows 83% of Criminals Rearrested Within 9 Years
A 9-year Justice Department study shows 44% of released prisoners are rearrested within 1 year; 83% within 9 years. 77% of drug offenders are rearrested for non-drug related crimes including 34% for violent crime. On average, released prisoners are rearrested 5 times. ... Read More
New Study Offers Worrisome News on Solutions to Global Warming
Some worrisome news from the Economist on global warming: “On October 19th, the International Energy Agency reported that doubling world GDP by 2040 would require only a small rise in energy demand if everyone adopted strict standards, like Japan’s for vehicle-fuel efficiency. … [According to their logic,] higher efficiency means less fossil fuel must be burned—and less planet-cooking gas belched—to power the global economy. But some economists are not so sure. [In] ... Read More
More Evidence Declining Manufacturing Reduced Lower Skilled Employment
The University of Chicago economist Erik Hurst finds: A 10 percentage point decline in the local manufacturing share [no matter the reason] reduced local employment rates by 3.7 percentage points for prime age men and 2.7 percentage points for prime age women. To put the magnitude in perspective, naively extrapolating the local estimates suggests that between one-third and one-half of the decline in employment rates and annual hours for prime age workers during the ... Read More
Rates of Return Are Low for American Big Pharma
The Economist reports that rates of return are low for American pharmaceutical companies: Given the rapid pace of scientific advances in medicine, you might think Big Pharma is in rude health. You would be wrong. Last year consultants at Deloitte estimated that returns on investment among the biggest American drugmakers fell to 3.2% from 10.1% in 2010 (see chart). Many observers blame the rising cost of bringing new drugs to market. It now costs an average of $2bn to ... Read More
