DoubleLine’s Jeff Mayberry and Samuel Lau spend the last Friday before Tax Day (Lau: “Pay your fair share”) discussing ways to approach equity risk premia dynamics, which are used to value the equity market, for the question of the week (starts at 16:54). With help from the firm’s equity team, the duo present valuations that rely on backward-looking data, discussing the work of Ed Yardeni as well as Professor Robert Shiller and the CAPE® Ratio. They also talk about the model of Professor Aswath Damodaran, which incorporates forward-looking measures. These models prompt Mayberry and Lau to caution that participating in the equity market means being exposed to market sentiment in the Era of Acronyms: FOMO (fear of missing out) and TINA (there is no alternative). They look forward to a quiet macro week while sticking by the Lau-coined wisdom: “Hold in May and stay that way.”
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