Experience Stern | News & Events

Excerpt from The Wall Street Journal -- "There are several approaches to estimating where it stands at any given time, including surveying investors and looking at the historic relationship between stock and Treasury returns. An alternative method involves using expected future cash flows from stocks, as Stern School of Business professor Aswath Damodaran has done in the model he has made available on his website. According to this, the S&P 500’s equity-risk premium as of the end of April was 5.8 percentage points, which counts as one of the higher readings in data going back to 1960. On that basis, it seems like there is a sizable cushion between still very low yields on Treasurys and the stock market’s expected returns. In other words, stocks don’t look so expensive on this basis."

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