Does the Fed Model travel well?

Owain ap Gwilym, James Seaton, Karina Suddason, Stephen Thomas

Research output: Contribution to journalArticlepeer-review

3 Citations (SciVal)


Equity markets are frequently valued on the basis of the relative yields of stocks and bonds. The most widely known of these comparisons is the Fed model; stocks are considered cheap when their earnings yield exceeds a long bond yield. Comparisons examining the performance of this metric and more traditional valuation measures such as earnings and dividend yields in six international markets are interesting. The Fed model turns out to be poor in explaining long-run returns, while it has some merit as a short-term tactical asset allocation tool.
Original languageEnglish
Pages (from-to)68-75
Number of pages8
JournalJournal of Portfolio Management
Issue number1
Publication statusPublished - 2006


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