For a long-term investor, holding listed shares leads to chronic disappointment

We examine the long-run trend in equity market indices relative to earnings per share and in PERs relative to interest rates and growth in the United States and the euro zone. We find that as a trend in the United States and the euro zone, growth in equity market indices has been lower than earnings per share ; and that PERs have not followed the interest rate-growth differential, as equity risk premia have risen sharply . The risk is obviously that of long-term investors deserting the listed equity market in favour of unlisted shares, with only high-frequency traders continuing to use the listed equity market.