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. 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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