Is the Equity Risk Premium Too Tight?

Chris at Hauseit® (https://www.hauseit.com) explains whether the equity risk premium is too tight. Are investors being adequately compensated for risk assets vs the risk free rate?

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When you compare the earnings yield of the S&P 500 or cap rates on investment properties in major metro areas vs say the 10 or 30 Year Treasury Note & Bond, then your first impression might be that the equity risk premium is much too tight.

However, there is more nuance to this question given the fact that equities for example are a real asset with earnings that grow, often more than inflation. Therefore, is there a better metric to compare with?

We'll discuss whether it makes more sense to compare earnings yield on the S&P 500 to 10 year real yields vs nominal yields.

We explore this mystery and explain further in the following video.
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Hauseit Group LLC, Licensed Real Estate Broker
Tel: +1 (888) 494-8258
Email: [email protected]
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