5 ms·
Damodaran gave a neat insight on this. "Equities are expensive. Against what? History? We can't go back in time and buy stocks. If we take out money from stocks
by prakhar897 5y ago
Damodaran gave a neat insight on this. "Equities are expensive. Against what? History? We can't go back in time and buy stocks. If we take out money from stocks, where will we park it." Emerging markets exposes to forex risks. Real estate, gold, bonds does not give much returns, crypto is even more riskier. There is nowhere else for money to go.
- baxtr 5y agoIt's the so called TINA effect. There Is No Alternative
- pydry 5y agoAsian equities? Emerging market equities?
- baxtr 5y agoRisk is definitely higher with those.
- prakhar897 5y agoAs mentioned above, asian markets performs better but the currency also get devalued consistently which eats into the gains dollarwise.
- zbyforgotpass 5y ago""" If 10-year Treasury notes yield 5%, for example, and you want at least a 3% equity risk premium, then you’ll only invest in a stock if you think you can get an 8% annualized return or higher. However, if 10-year Treasury yields are 1.5%, and you still want a 3% risk premium, then you’re willing to pay a higher valuation, and thus accept a lower dividend yield and lower expected returns from stocks; even 4.5% expected annualized returns would be better than a 1.5% Treasury yield. """ That is from the article. But it only works if US assets are the only game in town.
- nightski 5y agoEquities are expensive against future earning potential. Simple as that. I agree though, there aren't a lot of alternatives at the moment. But you need either growth or dividends to earn on stock. Growth might become a lot harder in a rising interest rate environment and dividends are not a great return with current market levels.