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Equity Risk Premium’s role in stock selection: Independent investment advice

    Today in the Financial Times is a fascinating article about the Equity Risk Premium (ERP). I had been intending to write an article about this topic before the article in the FT was printed. I shall point out that the author started on some good points but needs to elaborate on them. He said the ERP has been 3.9% a year over the last century according to Credit Suisse annual yearbook. What the ERP implies is that because you take more risk to buy stocks than bonds therefore you deserve a premium or extra benefit of stocks returning more than bonds.

March 9th, 2011|mayflowercapital blog|Comments Off on Equity Risk Premium’s role in stock selection: Independent investment advice