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Asset management and fund structuring boutique

Paying up for equity risk

Oct 16, 2023

As we are entering the Q3 result season, it is important to remember that the yield on US 6 month Treasuries is now more than 1% higher than the earnings yield of the S&P 500. Literally investors are currently paying up to take equity risk, which appears counterintuitive to say the least. This has not happened in the last 2 decades. Has the Fed overdone its job ? Are earnings expected to grow massively from here ? As we doubt it we stay focussed on quality companies with low valuations and add short term bonds to our customers portfolios.

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