A pet idea of mine is that the equity risk premium will eventually vanish or go negative, and stay that way. If interest rates go back to <=2% then we could see US equity indices trading at 50x-100x earnings.
The logic is that while individual stocks are clearly much riskier than fixed income, a diversified stock portfolio is in many ways…
A pet idea of mine is that the equity risk premium will eventually vanish or go negative, and stay that way. If interest rates go back to <=2% then we could see US equity indices trading at 50x-100x earnings.
The logic is that while individual stocks are clearly much riskier than fixed income, a diversified stock portfolio is in many ways much *less* risky. Consider the Treasury default scenario above, the 2021-22 bond crash, and the looming prospect of confiscatory taxation of bond coupons or other forms of financial repression as demographics ruins the government's fiscal position.
A pet idea of mine is that the equity risk premium will eventually vanish or go negative, and stay that way. If interest rates go back to <=2% then we could see US equity indices trading at 50x-100x earnings.
The logic is that while individual stocks are clearly much riskier than fixed income, a diversified stock portfolio is in many ways much *less* risky. Consider the Treasury default scenario above, the 2021-22 bond crash, and the looming prospect of confiscatory taxation of bond coupons or other forms of financial repression as demographics ruins the government's fiscal position.