Have a good break

Eumaeus and I will be taking a break until the New Year, until then, have a good holiday.

I will leave you with a further thought on the equity premium which I discussed last week.

Tyler Durden reports here on two papers by Edward F. McQuarrie of Santa Clara University, suggesting that the excess return of stocks relative to bonds is ‘far less alluring than many believe’. McQuarrie reports:

There are also almost a dozen cases of negative equity premia, lasting for as long as forty years. Collectively, these periods of rough equivalence (between stocks and bonds) cover about two-thirds of the 210 years. The best one sentence summary of the 210 year record would be that sometimes, stocks outperformed bonds, but at other times, bonds out-performed stocks; while much of the time, stocks and bonds performed about the same.

I am still hoping for a Santa rally though.