BEER in the markets
Feb 24, 04:02

BEER refers to the Bond yield Earnings yield Ratio. It is calculated by dividing the yield of 10-year government bonds (typically) by the earnings yield of a benchmark (e.g. Nifty). Earnings yield is the inverse of the price-earnings multiple. When the ratio is higher than one, it suggests that stocks are overvalued and vice-versa. Put it another way, BEER more than one means the yield on risk-free security is higher than that on a risky asset class. Investors have started to pay attention to BEER as bond yields rise thanks to the heavy government borrowing programme while earnings yield falls. ‚Äč

BEER gfx - Feb 24