What is the connection between the equity risk premium and bond yields
John Robertson
PortfolioDirect
What is the connection between the equity risk premium and bond yields? Does the equity risk premium include a term structure? Here is a worthwhile commentary from the economics department at the Federal Reserve Bank of New York (When Are Equity Investors Paid to Take Risk?, J. Benson Durham, 14 May 2014) about its analysis of expected equity returns and the cost of equity capital: (VIEW LINK). The innovative approach has implications for market valuation analysis generally but it has special relevance for all those mining company consultants and executives who habitually use inappropriately low discount rates when trying to entice investors into new projects and who then wonder why the market is not valuing their assets in the same way. The chart is taken from the FRBNY commentary.
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John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business strategist and investment market professional for over 30 years after starting his career as a Commonwealth Treasury economist in Canberra. Since being Australia's top-rated commodities analyst and chief economist at one of Australia' leading stockbroking firms, he has advised companies across the mining, consumer products, IT and biotech sectors on their equity market relations. He leads the firm's investment evaluation and security structuring activities on behalf of the Australian Small Scale Offerings Board (ASSOB), the world's first equity 'crowdfunding' investment platform. John Robertson discusses the interaction of mining and investment markets in his weekly 'From the Capital' column in Mining Journal.
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John Robertson
PortfolioDirect
John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...
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