2023 Risk Premium Risk-free Rate 
Musings on Markets
AUGUST 5, 2023
If you have been reading my posts, you know that I have an obsession with equity risk premiums, which I believe lie at the center of almost every substantive debate in markets and investing. That said, I don't blame you, if are confused not only about how I estimate this premium, but what it measures.
Musings on Markets
JUNE 2, 2025
For more than a decade, S&P remained the outlier, but in 2023, Fitch joined it by also downgrading the US from AAA to AA+ , citing the same reasons. The second is that local currency defaults are persistent over time, and while less frequent than foreign currency defaults, remain a significant proportion of total defaults.
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Musings on Markets
JANUARY 21, 2023
After a year of being pummeled by markets, what are investors pricing stocks to make in 2023 and beyond? The first is that the use of historical risk premiums is predicated on the belief that the future will look like the past, and the world, in all its dimensions, has changed dramatically over the last few decades.
Musings on Markets
AUGUST 15, 2023
In every introductory finance class, you begin with the notion of a risk-free investment, and the rate on that investment becomes the base on which you build, to get to expected returns on risky assets and investments. What is a risk free investment? Why does the risk-free rate matter?
Musings on Markets
FEBRUARY 11, 2023
A few weeks ago, I posted my first data update pulling together what I had learned from looking at the data in 2023, and promised many more on the topic. In the month since, I have added two more data updates, one on US equities and one on interest rates , but my attention was drawn away by other interesting stories.
Musings on Markets
JANUARY 30, 2023
The rise in rates transmitted to corporate bond market rates, with a concurrent rise in default spreads exacerbating the damage to investors. That view has never made sense, because central banking power over rates is at the margin, and the key fundamental drivers of rates are expected inflation and real growth.
Musings on Markets
OCTOBER 4, 2023
As we enter the last quarter of 2023, it has been a roller coaster of a year. In the first half of the year, we had positive surprises on both fronts, as inflation dropped after than expected and the economy stayed resilient, allowing for a comeback on stocks, which I wrote about in a post in July 2023.
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