From Pzena Management Q4 2012 shareholder letter: ‘Getting Paid To Own Equities’
The opportunity to own assets deemed risky is exceptionally attractive relative to history, as risk appears significantly mispriced in today’s markets. the broad equity market, and the cheapest quintile of stocks therein, carry expected returns of 10.9% and 15.7%, above their historical average. Relative valuations for financials were at close to all-time lows heading into 2012…the sector remains depressed today.
Full article here.