Let’s just discuss

In calculating the return on US stocks (S&P), it is assumed that the risk premium is at the level of 5%. In the classical sense, this is the actual excess of the expected return of a risky asset over the known return of a risk-free asset, which should be of interest to the investor.

If the yield growth of long UST 10y for 2022 is projected from 1.5% to 2.5%, then the yield of the S&P index, which would suit “investors”, should not be lower than 7.5% (2.5+5).

But if, according to Aswat Damodaran, the “fair” value of the S&P 500 index at the beginning of the year was estimated at 4320 points (10% lower than the end of 2021–4766. ), then the required value of the index, which should suit the investor, “should be” not lower than 4644 (107, 5% )

As of 2022–02–10, we have a value of — 4575 or 105.9% in relation to 4320 (the “fair” value of the S&P 500 index at the beginning of the year). It turns out that it’s too late to buy the index…?!

Based on materials by Viktor Tunev.