leo383 wrote:With stocks at or near all-time highs, are they riskier than they were 4 years ago at their 2009 lows?
Or is it just that the expected returns are lower, and the riskiness is the same?
When you say risker now, I am guessing you mean how risky going forward. In other words, you are interested in a forecast for how risky stocks will be in the future.
One measure of risk is volatilty, and the VIX
is the markets forecast for volatilty of the next 30 days. Right now, it's 13.70, which very low. I think the historical average is about 19.4
Four years ago, VIX was up around 40. So by that measure, stocks were thought to be riskier four years ago than they are today.
As far as expected return, E10/P earnings yield is about 4.3% today and was about 6.6% four years ago.
This makes sense. Four years ago stocks were perceived to be riskier, so had higher expected return than today. That's the basic principle of investing, if riskier investment, then demand a price discount -> higher expected return.
Тише едешь, дальше будешь. (Quieter you-go, further you-will-be.)