{"id":403481,"date":"2010-03-08T10:09:00","date_gmt":"2010-03-08T15:09:00","guid":{"rendered":"e2249889-c78b-43e3-9643-b1d7d4aa587b:404739"},"modified":"2010-03-08T10:09:00","modified_gmt":"2010-03-08T15:09:00","slug":"high-equity-risk-premiums-signal-caution","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/403481","title":{"rendered":"High equity risk premiums signal caution"},"content":{"rendered":"<p>The fact that equity risk premiums are elevated should come as little surprise given that stock market valuations have compressed consistently during the past decade \u2013 both in bull and bear markets.&nbsp; UBS explains that risk aversion is one probable reason for the elevated level of risk premiums. Low bond yields is another.<\/p>\n<p>It is interesting to note that bond markets have de-coupled from consensus forecasts. For the past ten years, bond yields have made the usual move of falling relative to long-tern consensus GDP estimates. <\/p>\n<p>UBS suggests the global savings glut is to blame for this. However, the investment bank said that given high levels of profitability, it is difficult to believe that excess savings reflects a lack of investment opportunities. Rather, this savings glut may simply be another manifestation of elevated risk aversion.<\/p>\n<p>High equity risk premiums suggest investors are very cautious. Meanwhile, earnings growth appears heavily discounted, UBS said. Stocks may be cheap, particularly when compared to bonds, but its work suggests that elevated equity risk premiums only reward investors with long-term time horizons.<\/p>\n<p>As a result, UBS maintained its cautious stance in terms of asset allocation, recommending a neutral position in global equities.<\/p>\n<p><a href=\"mailto:jratner@nationalpost.com\">Jonathan Ratner<\/a> <\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/network.nationalpost.com\/NP\/aggbug.aspx?PostID=404739\" width=\"1\" height=\"1\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The fact that equity risk premiums are elevated should come as little surprise given that stock market valuations have compressed consistently during the past decade \u2013 both in bull and bear markets.&nbsp; UBS explains that risk aversion is one probable reason for the elevated level of risk premiums. Low bond yields is another. It is [&hellip;]<\/p>\n","protected":false},"author":4059,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-403481","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/403481","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4059"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=403481"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/403481\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=403481"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=403481"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=403481"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}