Valuation model

MicroStrategy has become one of the most polarizing companies in public markets. Once a conventional business intelligence firm, it has transformed into the world’s largest publicly traded Bitcoin proxy, holding over a million BTC on its balance sheet and continuously raising capital to buy more. Supporters praise it as a visionary “Bitcoin ETF with leverage,” while critics argue it is an irrationally overvalued vehicle whose market capitalization regularly trades far above the fair value of its underlying assets. The persistent premium — the gap between MicroStrategy’s equity value and the market value of its Bitcoin holdings — has puzzled analysts, defied traditional valuation logic, and raised the question: why does this spread exist, and why does it not close through arbitrage? A recent academic paper, Valuing MicroStrategy, offers a structural model that explains this phenomenon and sheds light on how the firm’s unique financing mechanics allow its stock price to exceed the value of its assets.

Valuation models for equity indexes are essential tools for investors seeking to assess long-term market conditions. Traditional models like the CAPE ratio, introduced by Robert J. Shiller, or the Buffett Indicator often rely on macroeconomic variables such as corporate earnings or GDP. While informative, these models can be complex and dependent on data that may be revised or vary across regions. In this article, we introduce a simpler alternative: a valuation ratio based solely on the inflation-adjusted total return of the index, offering a streamlined and transparent approach to index valuation. Finally, our goal would be to answer the question from the title – Are the indexes fairly priced at the moment?