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Reflections on the equity risk premium and the Reversion of returns to the mean

Investors  attempt in the medium/ long term to take advantage of the extra returns generated by participating as shareholders in the selected companies of their portfolios. Taking non diversifiable Risk is eventually compensated by higher returns. In addition, as the investment horizon expands returns  exhibit a behavior observed in many aspects of life : a reversion to…

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The curse of the screen / Financial assets vs real estate / A simple example with rising interest rates 

Financial assets have  some great advantages like the ability to diversify and the possibility to engage in partial sales to finance desired expenses. No doubt, Liquidity is a great blessing. However, they also have a great disadvantage . They create nervousness as a result of their ability to provide continuous valuation. Investors sometimes panic by marking the…

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Inflation, interest rates  and the  Equity risk premium : A critical evaluation of the consensus views. 

A critical evaluation of the consensus views. The first quarter of 2022 reinforced the view that a diversified portfolio should strategically include most asset classes and can prove beneficial during hard times. Cash and gold justified during this period  their presence in portfolios despite not providing any yields !  Evidently, as always the portfolio asset…

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