Valuation – Magnificent Seven Forward P/E The Magnificent 7 stocks still trade at a premium over the rest of the S&P 500, but that premium has narrowed sharply in 2025 due to underperformance, slower earnings growth, and investors shifting interest to other sectors. Image: Goldman Sachs Global Investment Research
S&P 500 Equity Risk Premium With the U.S. equity risk premium at low levels, investors face a difficult landscape in which the risks of equity investments may not be sufficiently rewarded. Image: BCA Research
Global Market Implied Equity Risk Premiums The current low U.S. equity risk premium suggests a challenging environment for equity investors, as the balance between risk and reward is less favorable than in the past. Image: Goldman Sachs Global Investment Research
S&P 500 Equity Risk Premium Given the present S&P 500 equity risk premium, investors might not be adequately rewarded for the risks inherent in stock investments, which has increased the relative attractiveness of U.S. Treasury bonds. Image: Morgan Stanley Research
U.S. 10-Year Treasury Term Premium The increasing term premium suggests investors require greater compensation for longer-term bonds, reflecting heightened interest rate and inflation risks associated with extended durations. Image: Morgan Stanley Wealth Management
S&P 500 Equity Risk Premium With the S&P 500 equity risk premium hitting multi-decade lows, investors may find bonds more appealing than stocks. Image: Goldman Sachs Global Investment Research
Equity Risk Premium The equity risk premium, at the 94th percentile from 2010 and at the 67th percentile from 2000, suggests that investors may not be receiving adequate compensation for the risks associated with investing in U.S. stocks. Image: J.P. Morgan Equity Macro Research
Equity, Bond, FX and Oil Volatility Premiums Volatility premiums have significantly declined across asset classes after the U.S. elections. As election results become known, market uncertainty diminishes, leading to lower volatility premiums and increased stability. Image: Deutsche Bank Asset Allocation
S&P 500 Equity Risk Premium Despite potential in U.S. equities, the decline in equity risk premium suggests caution is needed, prompting diversification across asset classes for risk management. Image: BofA Global Research
S&P 500 Equity Risk Premium Considering the substantial decline in the equity risk premium, which currently stands well below its historical average, should investors approach U.S. equities with caution? Image: BofA US Equity & Quant Strategy
U.S. Equity Risk Premium – Long-Term View Should investors approach U.S. equities with caution due to the significant decline in the equity risk premium, which stands well below its historical average? Image: Topdown Charts