Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: Axel Gunderson who wrote (490)	7/10/1998 7:34:00 PM
From: Freedom Fighter	Read Replies (1) \| Respond to of 1722

Axel, >I agree that the anticipated growth rate over any "next few years" >will vary with inflation and projected GDP. However, the average >growth in the earnings since the start of 1970 for the S&P 500 is >right around >6.4%, plus or minus 0.1% Your facts are certainly correct but in trying to determine the appropriate/average risk premium for stocks over bonds it is necessary to use the assumptions that may have prevailed at that time and not the actual results. The actual results often are very different. In the high inflation periods, nominal GDP projections may have been as high as 6% inflation + 3% growth = 9% The risk premium looks much different at that time calculated this way than using 6.3%.