The Equity Risk Premium: A Novel Perspective on the Past Fifty Years

4 Pages Posted: 23 Mar 2020

Date Written: March 20, 2020

Abstract

The longest bull market in US stock market history is over. Uncertainty over the public health and economic impact of the coronavirus pandemic will keep markets extremely volatile, making it likely we’ll touch a wide range of price levels in the months ahead. Amidst such uncertainty, it’s a particularly good time to take stock of long-term return prospects. In doing so, we’ll present an often-overlooked perspective on the market’s attractiveness which is both intuitive and technically sound. We hope long-term investors will find it useful in deciding how much stock market exposure they want right now, and at other levels the market may visit in the future.

Keywords: stock market, historical returns, COVID-19, coronavirus, equities, expected returns, CAPE, long-term investing

JEL Classification: B12, B16, B20, C00, C10, C11, C50, C57, C73, D03, D81, D83, E00, G00, G02, G11, G12, G14, G17, G23

Suggested Citation

White, James and Haghani, Victor, The Equity Risk Premium: A Novel Perspective on the Past Fifty Years (March 20, 2020). Available at SSRN: https://ssrn.com/abstract=3558041 or http://dx.doi.org/10.2139/ssrn.3558041

James White (Contact Author)

Elm Partners ( email )

1630 Willow View Drive
PO Box 1417
Wilson, WY 83014

Victor Haghani

Elm Partners ( email )

1630 Willow View Drive
PO Box 1417
Wilson, WY 83014

HOME PAGE: http://www.elmfunds.com

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