TY - JOUR T1 - Finding Fair Value in Global Equities: <em>Part I</em> JF - The Journal of Portfolio Management SP - 80 LP - 93 DO - 10.3905/JPM.2010.36.2.080 VL - 36 IS - 2 AU - Jessica Binder AU - Anders Ersbak Bang Nielsen AU - Peter Oppenheimer Y1 - 2010/01/31 UR - https://pm-research.com/content/36/2/80.abstract N2 - This article, the first of a two-part series, develops a framework for comparative valuation of major equity markets around the world. The authors outline four stages of a dividend discount model and the sensitivity of the model’s valuation results to key assumptions.They then summarize their results using the following three valuation scenarios: 1) central scenario—values the market taking the bond yield as a given and using an equity risk premium (ERP) adjusted for the economic environment; 2) fair value scenario—values the market assuming that the ERP and the bond yield are at their “fair value” levels given the economic environment; and 3) equilibrium value scenario—values the market assuming the long-run average ERP and a real bond yield of 2%; this scenario is a not a measure of current fair value, but a measure of the upside potential for markets if the discount rate were to normalize.TOPICS: Global, fundamental equity analysis, in markets ER -