Sentences with phrase «historical equity risk premium»
First, the historical equity risk premium was high and decades could pass before a big - enough crash, making it very costly to sit in cash.
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Estimates of the future equity risk premium should start with historical results and then adjust for expected shifts in stock market variability and non-repeatability of unusual past cash flows.
... formal asset valuation models (extrapolations of historical return data) provide the most (least) predictive estimates of the future equity risk premium.
Below is a chart of the historical S&P GSCI Energy TR index levels versus the equity risk premium as measured by the S&P 500 Energy Total Return monthly minus the S&P 500 Energy Corporate Bond Index Total Return monthly.
In historical oil bottoms, the energy equity risk premium, that measures the difference between the S&P 500 Energy Sector and the S&P 500 Energy Corporate Bond Index, has switched from a discount to a premium.