The equity risk premium (ERP), the extra return investors demand for holding equities over risk-free assets, is at its lowest level in years, and it's flashing yellow lights across institutional dashboards.
Stern Business School Professor Aswath Damodaran noted that the implied ERP for the S&P 500 dropped to just 4.21% in July. That number shows that investors are taking on more risk for a lower potential reward.
