Discussion Paper

Are Stocks Cheap? A Review of the Evidence


Abstract: We surveyed banks, we combed the academic literature, we asked economists at central banks. It turns out that most of their models predict that we will enjoy historically high excess returns for the S&P 500 for the next five years. But how do they reach this conclusion? Why is it that the equity premium is so high? And more importantly: Can we trust their models?

Keywords: term structures; excess returns; stock returns; S&P 500; Treasury yield; Equity premium;

JEL Classification: G1;

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Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Liberty Street Economics

Publication Date: 2013-05-08

Number: 20130508