|Stocks: S&P 500; T.Bills: 3-mth Bills; T.Bonds: US 10-year
Geometric average is based on compounded returns
Clint Carlson's hedge fund, Carlson Capital's Double Black Diamond strategy, gained 1.04% net of fees in the month of September. Following this performance, the fund has returned 9.87% net of fees for the year to the end of the month. Q3 2021 hedge fund letters, conferences and more The Double Black Diamond strategy makes up Read More
The ERP moved within a fairly narrow band for most of the year, ranging from just under 5% to about 5.5%, with the jump to 5.78% at the end of the year, reflecting the updating of the growth rate.
|My estimates of ERP at the end of every year from 1960 to 2014|
|Baa rates from the Federal Reserve data site (FRED) and Baa default spread computed relative to US 10-year T.Bond rate in that year.|
The Weakest Links
|Based on aggregate numbers for S&P 500|
3. Crisis, contagion and collapse? If we learned nothing else from 2008, it should be this. We are all part of a global economy, connected at the hip, and while that can yield benefits, the contagion risk has increased, where a crisis in one part of the world spills over into the rest of it. Again drawing on my post on oil, one danger of the sudden collapse in oil prices is that it has not only increased uncertainty about economic growth in the next year but also increased the risk of large, levered oil companies defaulting and sending shockwaves through the rest of the economy.
- Historical Returns for US stocks, T.Bonds and T.Bills: 1928-2014
- Implied Equity Risk Premiums for S&P 500: 1960-2014
- ERP, Baa Yields and Real Estate Cap Rates: 1960-2014