Another month, another look at ERP’s (Damodaran, and the Shiller PE back solved).
Weak markets, higher rates, make for a fairly attractive ERP ex ante, a compelling reason to allocate capital.
PE’s in general are undemanding, having de-rated substantially.
The key is “where to” for earnings. And that isn’t very clear. There are times when we’ve got a high degree of conviction and have proportionate tilts.
This ain’t one of those times. Strong economy in a tug-of-war against higher rates and an “engineered” slowdown.
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