Fox Business News - The Cyprus Effect
Of the topics discussed on of the more interesting debate points was on the issue of "earnings yield" as a measure of investment. When discussing where to put "savings" the idea of using an "earnings yield" as a benchmark is misleading. Investors, and more importantly "savers", do not receive the earnings yield from stocks. However, savers DO receive the return of principal and the interest yield on bonds. Therefore, when discussing where to allocate "savings" - that discussion should NEVER be about the stock market.
The stock market is for assets placed at "risk" in the hopes of garning a rate of return in line with, or slightly in excess of, inflation. Investors have done a miserable job of this over the last 12 years by speculating too heavily in the financial makrets and consistently losing principal.