4In fact, one book, Dow 36,000, which was published in 1999 shortly before the stock market peaked, argued that «fair value» for the Dow Jones Industrial Average should be 36,000 because the
appropriate risk premium for the
equity market versus Treasury bonds should be zero.
Put simply, even taking account of current interest rate levels, and even assuming that stocks should be priced to deliver commensurately lower long - term returns, we currently estimate that the S&P 500 is about 2.8 times the level at which
equities would provide an
appropriate risk premium relative to bonds.