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Criticisms of the Fed Model

December 25, 2016
  1. It does not consider an equity risk premium.
  2. It ignores the portion of equity value that comes from long-term earnings growth.
  3. It compares a real variable (index yield) to nominal variable (government bond yield) which makes it unhelpful when inflation is either non-existent or very high.
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From → Asset Valuation

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