The Price of Risk: With Equity Risk Premiums, Caveat Emptor!
Вставка
- Опубліковано 19 чер 2024
- The equity risk premium (ERP) is the price of risk in the equity market, set by demand and supply, but determined by economic and market fundamentals. In this session, I look at why the ERP is embedded in almost every investment decision, as an input, and why its level should matter to investors. I look at different approaches to estimating it, from looking at the past (historical returns) to using shortcuts (the earnings yield) to backing out the premium for stock pricing, and why they yield divergent estimates for the ERP, and how to reconcile them.
Slides: pages.stern.nyu.edu/~adamodar...
Blog Post:
I've just started deep diving into ERP! Thanks Prof for the timely upload!
Stocks are rallying but I know better, macro shows the economy is yet to recover. I been holding stocks to sell at a profit at this time but it is looking like a bull market the rest of 2023. I am in a fight to hold or to sell. I’m up to 297 grand from a low of 250 thousand last year.
FOMO is the problem. Nothing to see here.
The market has been a turmoil since covid, the brief relief rallied for only a year and now the devastating effects of pumping trillions into the economy is here and will be for a while.
Stay in the mrkt and sell only if you need those funds. I got laid off and it has been difficult getting another source of income, glad I was investing when I did and of course with guidannce from a wealth-manager don’t listen to naysayers. I am making bank and the penalties for drawing from 401k to reinvest are nothing compared to the amount of wealth I now possess with my family.
@simone_maya I have seen a lot about FAs and actually want to consult some pro. How did you go about it? Is yours any good?
@xavier_lucas I have saved myself from all the hassle that the chaotic market causes. These days the best way to come into the market space is seeking guidance, due to side hustles i can’t handle my portfolio so i just work with LOREN LENA WALKER, a FA i came across via a recommendation from one of these UA-cam retirement coaches.
It’s been smooth since then. Cliche as it may I have made a mark up of 70% in profits investing 350k under her. It helps not to be worried about your portfolio every minute of the day.
Brilliant content. Thank you very much for teaching us!!!
Happy Guru Poornima 🙏 💐💐💐
This video is highly under appreciated. Thank you so much!
Thanks Professor. Very deep insight to the subject❤
Very good video. Well done Professor!
Hi master.
Long time no see.
Your material is great and awesome.
If I was a financial book publisher, I would approach you about an ERP book, professor. As always, thank you for sharing your knowledge and insights with the world.
Thanks for share.
Waiting for an update on the valuation of zomato, given its recent hype of profitability 😶
Yes!!
Amazing content thank you so much. Would have been interesting to dive also in the CAPE and Excess CAPE Yield from Shiller. Any opinion about that?
MST overrated market metric in history. See this post: aswathdamodaran.blogspot.com/2016/08/mean-reversion-gravitational-super.html
Professor, could we use the implied erp + rf as expected stock return in a portfolio allocation strategy with other assets?
What is the default spread and how it is defined?
Sir please tell us from where which website you get CDS spread ? Please sir 🙏🙏🙏🙏🙏🙏🙏
Sir I want access of Bloomberg. How can I get it, could you guide me for it
☕☀️❤🙏
I agree with calculating the ERP in a forward-looking approach, but wouldn't you agree that most of the analysts are looking backwards due to laziness?
How about something on the valuation of companies by VCs? Can we make financial models with probability states
Shouldn't we intuitively get to this inclusion? If PE ratios are low, then you have a chance for multiple expansion. Whether pe is high or low, the future is unknowable, so the future in both situations is x. The same variable. So the only way to maximize the value of that is buying at a low pe?
It is fuzzy and dynamic, precision calculation is useless, much better focus on qualitative factors you had mentioned, I found they are a bit useful .
what qualitative factors Professor has mentioned?