Set where you think the market will be a year from now. The page prices the S&P 500 with Gordon + CAPM and compares a year of stock returns to buying the 10-year today.
| Today | 1 year out | Change | |
|---|---|---|---|
| rf (10-year yield) | |||
| β × ERP (risk premium) | |||
| r (required return) | |||
| g (long-run growth) | |||
| r − g (the gap) | |||
| D₁ (forward earnings) | |||
| P (S&P 500 level) | |||
| Stock return, 1 yr (price + dividends) | |||
| Bond return, 1 yr (10-year bought today) |
Today's values: 10-year 5.18% (Treasury curve, Sep 24 close). ERP 4.14% (Damodaran implied ERP, Sep 1, 2026). β = 1 for the index. D₁ = $400.55, forward 12-month S&P 500 EPS from FactSet's forward P/E of 19.1 at 7,650.50 on Sep 18. Dividend yield 1.05% (multpl.com, S&P data, Sep 24 close). Long-run g = 4.145% is backed out as r − D₁/P so today's price matches the S&P 500 at 7,740.28 (Sep 25, 11:10 AM PT).
g₁ starts at FactSet's CY2027 S&P 500 earnings growth estimate of 15.2% (Earnings Insight, Sep 18, 2026), which lifts D₁ to $461.43. It is kept separate from long-run g because Gordon's g lasts forever and must stay below r; 15.2% as long-run g would give r − g below zero and no price.
The second line in the banner is the multiple test: Δg > Δr means the r − g gap is shrinking and valuations are helping; otherwise they are hurting. The bond return assumes you hold the 10-year and collect its yield for a year (price changes on the bond are ignored). Not advice.