FYI: During the period from 1927 through 2015, there has been a very large difference between the returns to the S&P 500 and returns to risk-free Treasury bills – about 8.5 percent on an annual average basis and about 6.7 percent on an annualized basis. The large spread in returns between these securities is often referred to as the equity premium puzzle, because, unless investors have implausibly high levels of risk aversion, the equity premium’s historical average is simply too high to be justified by standard economic models.
Regards,
Ted
http://mutualfunds.com/expert-analysis/myopic-loss-aversion-and-the-equity-risk-premium-puzzle/