The paper is verbose (155 pages) and not riveting reading, but it does include everything I know about equity risk premiums and their estimation. My first update was written in 2009, during the financial crisis, and I have updated it annually since. t.co/wZcZy5Az5C pic.twitter.com/dFUA7sbVNr
— Aswath Damodaran (@AswathDamodaran) March 30, 2024
The standard approach to estimating equity risk premiums is to look backwards, estimating the extra return investors would have earned, investing in stocks, instead of treasury bonds. These historical premiums are backward looking and noisy. t.co/wZcZy5Az5C pic.twitter.com/Y5Kl84NM9V
— Aswath Damodaran (@AswathDamodaran) March 30, 2024
The much-vaunted small cap premium that analysts and appraisers use to augment expected returns for small cap stocks has been non-existent since 1981, but the premium lives on in practice. pic.twitter.com/JTB2htMhcm
— Aswath Damodaran (@AswathDamodaran) March 30, 2024
S&P 500 $SPX is expensive based on 19/20 metrics pic.twitter.com/p33ZgYkMAg
— Barchart (@Barchart) March 31, 2024