Risk premia on equities in the United States and Japan have contracted down to tiny levels—equities now offer only barely additional return versus bonds, to justify the added risk.
Historically, these episodes do not end well for those who keep buying equities at high valuations. When the premium collapses, it’s not the stock price that catches up—that’s usually the stock price that falls.
This is a valuation-related warning, not a timing signal. But when you pay equity prices for bond-like yields, the margin of safety is gone. Things are reverting to normal. It always ends up happening.
$NVDAB
$BTC
Historically, these episodes do not end well for those who keep buying equities at high valuations. When the premium collapses, it’s not the stock price that catches up—that’s usually the stock price that falls.
This is a valuation-related warning, not a timing signal. But when you pay equity prices for bond-like yields, the margin of safety is gone. Things are reverting to normal. It always ends up happening.
$NVDAB
$BTC