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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: BGR who wrote (71294)	12/2/1999 2:36:00 PM
From: Freedom Fighter	Read Replies (3) \| Respond to of 132070

BGR, Warren Buffett just estimated that stocks will return 6% pre frictional costs over the long term from here. If he is correct, that's a negative risk premium vs. the government teasury and much less than you can get in high quality corporates held to maturity. pathfinder.com Wayne

To: BGR who wrote (71294)	12/2/1999 2:42:00 PM
From: Michael Bakunin	Read Replies (1) \| Respond to of 132070

This interview did a good back-of-the-envelope estimate: pathfinder.com Alternatively, try the hackneyed constant-growth model. The Russell 3000 yields 1.3%. Say dividends increase with GDP, and GDP increases 5% (nominal) per year. Total value of that index is now around $12 trillion, so your expected return is 6.3%, just about what 30-year bonds now yield. To get near the historical equity premium under this model, GDP has to grow 10% (nominal). Whew -- punk rock. -mb