Stock Earnings Yield High Relative to Bond Yields – 03/31/12

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For decades, the stock earnings yield generally moved in the same direction as Treasury yields and was often lower. Over the past two years, bond yields fell to historic lows, while the earnings yield rose to its highest level since the 1980s. The time the yield difference was this wide marked the beginning of a prolonged period of stock outperformance.

 

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