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Summary
MSCI ACWI earnings and dividend yield compared to risk-free rates over time.
Description
The global stock market is represented by MSCI All Country World Index (ACWI). This consists of all mid and large cap companies globally, scaled by market capitalization. In the graph, the global stock market is treated as a single company showing the amount of earnings (last 12 months) generated for given amount invested in this synthetic company. A lower value means the yields are lower, or conversely that prices are higher relative to current earnings and dividends. This is compared to the three-month treasury bills rate or "money-in-the-bank". Since 2016 investors have gotten a premium to short term rates by investing in the stock market. Since mid-2023, this is no longer the case.