Post #10440 by AdrianC on the US Policy board

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There was an interesting thread over at Bogleheads on ERP. I know many here wouldn't darken their door :-)

WaPo:
https://archive.ph/UHPLk
The so-called equity risk premium—or the gap between the S&P 500's earnings yield and that of 10-year Treasurys—shrank to close to zero this week, the lowest level since 2002, according to Dow Jones Market Data.

ERP at zero?

Aswath Damodaran thinks differently?

How to calculate:
https://papers.ssrn.com/sol3/papers.cfm?abstract_i...

Takes expected growth into account.

Latest:
https://pages.stern.nyu.edu/~adamodar/

Implied ERP on November 1, 2024=
4.04% (Trailing 12 month, with adjusted payout);
4.29% (Trailing 12 month cash yield);
6.19% (Average CF yield last 10 years);
4.17% (Net cash yield);
3.90% (Normalized Earnings & Payout)

4% ain't so bad?

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