Sentences with phrase «future valuation premiums»

Not exact matches

We allow that short - term interest rates may be pegged well below historical norms for several more years, and we know that for every year that short - term interest rates are held at zero (rather than a historically normal level of 4 %), one can «justify» equity valuations about 4 % above historical norms — a premium that removes that same 4 % from prospective future stock returns.

... formal asset valuation models (extrapolations of historical return data) provide the most (least) predictive estimates of the future equity risk premium.

Both trade at premium valuations, reflections of their strength today and also their potential in the future.

I've observed this before, and it's essential to repeat it again: if interest rates are lower because likely future growth in deliverable cash flows is also lower, then no valuation premium is justified at all.

When everyone believes in the inevitability of stocks, à la «Dow 36,000» (we'll get there by 2025 or so), equity valuations are high, past equity performance has probably been great, and the future equity premium is small — think 1929, 1972, August 1987 and February 2000.

We allow that short - term interest rates may be pegged well below historical norms for several more years, and we know that for every year that short - term interest rates are held at zero (rather than a historically normal level of 4 %), one can «justify» equity valuations about 4 % above historical norms — a premium that removes that same 4 % from prospective future stock returns.

The obvious problem is they're generally priced accordingly — their additional valuation premium reflecting the (perceived) consistency & sustainability of future excess profits.