The hottest Financial Models Substack posts right now

And their main takeaways
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What Do Investors Need From The Problem Slide? & Do Startup Need Financial Model? | VC Jobs

Venture Curator • 219 implied HN points • 07 May 24
💼 Business Financial Models
  1. Investors need a clear understanding of the problem a startup is solving, focusing on why it's worth solving and who faces the problem.
  2. For a successful pitch to investors, startups must present a business model beyond just pricing, detailing revenue streams, competitive advantage, and key economics.
  3. In the world of venture capital, the potential for startups to become billion-dollar companies is crucial for investors, impacting funding decisions and the overall success of the venture.

No, KKR is not “equity washing”

The Novelleist • 412 implied HN points • 10 Jul 25
💼 Business Financial Models
  1. KKR is helping employee ownership grow, even if it's temporary. They buy struggling companies and give employees a share of the profits while they own them.
  2. Critics say KKR's model isn't enough compared to true employee-owned companies, but it still offers more benefits than most private equity firms do.
  3. We need a variety of ways to give employees equity in their companies. Every little bit helps in reducing wealth inequality and giving workers a stake in their workplaces.

Making Markets in Time

Pivotal • 394 implied HN points • 25 Jan 25
💼 Business Financial Models
  1. Silicon Valley focuses on 'temporal arbitrage', which is about making money over time by investing at different stages of a startup's growth. This helps investors bridge gaps between early ideas and established companies.
  2. The modern venture capital system divides funding into specific stages, like seed and series rounds. Each investor specializes in different stages, making the process smoother and more efficient.
  3. Success in venture capital often comes from being part of a shared consensus on what makes a company fundable. Investors try to follow trends rather than go against the grain to align with what other investors believe.

TradFi 2.0

DeFi Education • 699 implied HN points • 05 Jul 22
🔮 Crypto Financial Models
  1. TradFi 2.0 refers to a next-level iteration of traditional finance that mixes with new innovations. This means using technology to improve and change how financial systems work.
  2. Decentralized finance (DeFi) aims to provide financial services without central authorities. It represents a shift towards transparency and independence in finance.
  3. Critiques are common within DeFi spaces to ensure that protocols are held accountable. It's important to recognize mistakes and learn from them for better future decisions.
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Quant Letter: January 2024, Week-2

The Parlour • 30 implied HN points • 09 Jan 24
💰 Finance Financial Models
  1. The Combinatorial Purged Cross-Validation (CPCV) method is superior in financial analytics for reducing overfitting risks.
  2. SPX options data analysis finds limitations in accurately capturing implied volatility using Volterra Bergomi models.
  3. Incorporating Risk premia strategies in portfolios can lessen left-tail exposure, but diversification within options requires maximizing volatility parameters.

LTCM: 25 Years On

Net Interest • 34 implied HN points • 18 Aug 23
💰 Finance Financial Models
  1. The collapse of Long-Term Capital Management had significant implications for the finance industry.
  2. One possible reason for LTCM's downfall was overreliance on sophisticated modeling.
  3. Although LTCM had managed its leverage tightly, it still faced a perilous downfall due to a combination of factors.

Is macroeconomics a mature science?

Klement on Investing • 3 implied HN points • 03 Jul 25
💰 Finance Financial Models
  1. Macroeconomics has established theoretical frameworks that guide research and models, but these may not always be the best fit for real-world behavior.
  2. The predictive power of macroeconomic models is limited, making them less useful for investors but potentially helpful in forecasting broad economic trends.
  3. While there is some agreement on methodologies, many practitioners do not keep up with new findings, and integration between different fields is not as strong as it could be.

Quant Letter: August 2025, Week-1

The Parlour • 0 implied HN points • 07 Aug 25
💰 Finance Financial Models
  1. Market makers can influence prices using smart financial models, allowing them to adopt winning strategies. This means that how they operate shapes the market itself.
  2. There's a new math model that looks at complex positions like they're options, helping to understand risks and potential losses better.
  3. The latest research in finance is exploring innovative approaches to market making and risk management, showing a shift towards more analytical methods.

Myth 5.1: If you don't believe in forever, you cannot do a DCF

Musings on Markets • 0 implied HN points • 30 Nov 16
💰 Finance Financial Models
  1. You don't need to believe cash flows last forever to do a discounted cash flow (DCF) analysis. There are ways to estimate cash flows that make sense even if the asset doesn't last indefinitely.
  2. Terminal value is very important in DCF calculations, so you can use methods like annuities or liquidation value to estimate it. These options can provide a realistic view of an asset's worth without assuming it will last forever.
  3. One common mistake is using market multiples for terminal value, which can skew the true value of a business. It's better to focus on cash flows and intrinsic value rather than just market pricing.

Momentum versus Contrarian: Two Reads of the ERP

Musings on Markets • 0 implied HN points • 08 Aug 11
💰 Finance Financial Models
  1. The equity risk premium (ERP) is important for estimating returns when valuing companies. It's useful to track how it changes, especially during market crises.
  2. A forward-looking approach to ERP, rather than a past-centric one, helps predict stock returns better. You can find tools online to calculate current ERP using market indexes.
  3. Investors react differently to changes in ERP: contrarians see it as a buying opportunity, momentum investors might follow trends, and some may choose to stay in cash until things stabilize.

Alternatives to the CAPM: Wrapping up

Musings on Markets • 0 implied HN points • 30 Apr 11
💰 Finance Financial Models
  1. Ignoring risk in investments is a big mistake. You need your own way to measure and manage risk because investments have different levels of risk.
  2. Using numbers is important for valuing companies, but don't forget the stories behind them. The results in numbers should reflect the company's real situation.
  3. Keep your methods simple. A straightforward approach, like CAPM, can be useful, and it's important to question and refine your risk assessment regularly.

Fama-French and the Proxy Wars

Musings on Markets • 0 implied HN points • 21 Feb 09
💰 Finance Financial Models
  1. Fama and French found that traditional models like CAPM don't explain stock returns well, especially over long periods. They looked for other factors that might explain differences in returns better.
  2. They discovered that smaller companies and those with low price-to-book ratios tended to have higher returns. They saw these factors as signs of risk rather than market inefficiencies.
  3. In deciding between using CAPM or their proxy models, it often depends on your goal. For evaluating past performance, proxy models work well, but for future return predictions, sticking with CAPM is usually better.

Quant Letter: November 2024, Week-3

The Parlour • 0 implied HN points • 20 Nov 24
💰 Finance Financial Models
  1. Vulnerability Conditional Risk Measures help assess risk during financial crises. They focus on understanding tail risks in the market.
  2. Research on heavy-tailed risks can show how certain extreme events might develop. It looks into the behavior of sums of risk factors.
  3. New studies in finance are slowly changing how we understand and measure risk. Keeping up with these developments can improve investment strategies.