Our equity risk premium model shows when the US stock market return for the next 10 years is more or less attractive than the 10-Year Treasury Note.

Since 1970, the 10-year Treasury Note was less attractive than the US stock market over a 10-year period, except in 1972-1973, and 1997-2002 during the internet bubble. So, over the last 50 years, Warren Buffett is right when he says that stocks are generally better than bonds.

Note that on 10/01/2018, the equity risk premium = 0%, just before the stock market crash. Is it just a pure coincidence? Not at all.

Our equity risk premium model has a great 96% correlation with the US stock market on a quarterly basis since 1970 and an R² of 0.92. For more information, we invite you to see the video tutorial of the equity risk premium.