Musings on Markets
The article analyzes Q3 2023 market performance, examining equity and bond market movements, risk capital availability across IPOs, venture capital, and high-yield bonds, and provides a valuation assessment of the S&P 500 under multiple macroeconomic scenarios. The author concludes that while risk capital remains constrained despite equity gains concentrated in large-cap stocks, the market appears fairly valued with more downside than upside risk based on Monte Carlo simulations.
Metrics in this report
4.59percent
As of October 1, 2023
4.73percent
As of October 1, 2023
4.84percent
Implied equity risk premium as of October 1, 2023
27.27percent
Technology-heavy index through Q3 2023
40percent
Economist consensus probability as of Q4 2023
4147index points
Base case valuation under consensus earnings and current interest rates
12.13percent
Large-cap stocks through Q3 2023