Valuation – 12-Month Forward P/E and Equity Risk Premium Despite the rise in the forward 12-month P/E ratio, the equity risk premium is in line with its long-term average. Image: Fidelity Investments
S&P 500 Equity Risk Premium and Yield Gap The S&P 500 equity risk premium remains high at 6% and above its historical average. Image: Goldman Sachs Global Investment Research
S&P 500 Equity Risk Premium – Consensus Bottoms Up Earnings Yield – 10-Year Treasury Yield As low real yields are driving investors to equities, could stocks continue to rise if the equity risk premium falls to 3%? Image: Morgan Stanley Research
Dividend Discount Model (DDM) Implied Equity Risk Premium (ERP) Goldman Sachs expects the equity risk premium to be lower moving forward, as the macro backdrop strengthens. Image: Goldman Sachs Global Investment Research
Equity Risk Premium (ERP) – S&P 500 Earnings Yield Minus 10-Year Treasury Yield Chart suggesting that the S&P 500 looks attractive relative to bonds. Image: SunTrust Private Wealth Management
VIX (Volatility) and Implied Equity Risk Premium The risk of a correction is rising, as the implied equity risk premium is now below what the VIX would suggest. Image: Fidelity Investments
S&P 500 Equity Risk Premium – 2020 vs. 2009 Same equity risk premium in March 2020 as March 2009, but 30% higher P/E thanks to the level of rates. Image: Morgan Stanley Research
S&P 500 Equity Risk Premium and S&P Bear/Base/Bull Targets Morgan Stanley raises its year-end S&P Bear/Base/Bull targets to 2500/3000/3250, as the equity risk premium could quickly disappear. Image: Morgan Stanley Research
U.S. Equity Risk Premium – Long-Term View This chart suggests that U.S. equities look attractive relative to bonds. Image: Topdown Charts
S&P 500 – Equity Risk Premium This chart suggests that the S&P 500 looks attractive relative to bonds. Image: SunTrust Private Wealth Management