The Equity Risk Premium and what to use it for
On this basis it could be argued that, at that time, since expected returns were well below historic norms, prices were too high.
equity risk premium
CAPE’s halo falls with a thud
CAPE is ignorant of interest rates
How much riskier are stocks than bonds?
In such an environment, many investors actually consider investments they are making are low risk when, in fact, they are higher risk.
Problems with CAPE Part lll
Wrap up on the drawbacks of CAPE. A fair level for price earnings ratios has changed over the years.
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