The forward earnings yield on the MSCI World Equity Index (the earnings-price ratio) now stands around 6%, down from 9% just after the global financial crash. That is roughly the same level as during the early 2000’s, when government bonds yielded in aggregate about 4%.

Today’s 6% earnings yield compares to an aggregate bond yield of about 2%. So the equity risk premium that investors receive for taking the additional risk of holding equities is double what it was in the 2000’s.

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Source: Bloomberg

The chart below shows the equity risk premium globally:

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Source: Bloomberg

By historical criteria, stocks aren’t particularly expensive vs. bonds.