The Extra Reward for Owning Stocks Over Bonds Has Disappeared
Macro
The equity risk premium, the historical extra return for holding stocks over safe bonds, has fallen to near zero. Despite this fundamental warning sign, retail investor demand for equities remains high, creating a potential contrarian setup for a market correction.
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Angle
↓ SHORT-7% target+3% stop4-8 weeks
Short SPY as the Equity Risk Premium vanishes; retail bullishness looks like a classic late-cycle contrarian signal.