Low bond yields have in the past been bad, not good, for equity returns

Source: Economist

Category: Dividends, Fixed Income/Interest Rates, Video

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3 Responses to “Broken Relationship: SPX Yield vs 10 Year”

  1. HighSeas says:

    Do we know the earnings data used in these calculations? I don’t see a plunging earnings yield in 2008-2009 when earnings (actual or operating) collapsed…

    • Its not P/E, its EARNINGS YIELD — its the INVERSE of the P/E.

      In 2008, its the spike up of the light blue line and the spike down of the dark blue line around 52-54 second mark)

      • HighSeas says:

        I get the inverse of the p/e part — but the earnings yield would spike up on the 40% drop in S&P price only if the numerator were relatively stable. Didn’t operating earnings fall by over 50% and stated earnings nearly go negative in that period? What did I miss — or else the earnings data are smoothed?