The returns earned by U.S. equities since 1926 exceed estimates derived from theory, from other periods and markets, and from surveys of institutional inves-tors. Rather than examine historic experience, we estimate the equity premium from the discount rate that equates market valuations with prevailing expecta-tions of future flows. The accounting flows we project are isomorphic to projected dividends but use more available information and narrow the range of reasonable growth rates. For each year between 1985 and 1998, we find that the equity pre-mium is around three percent ~or less! in the United States and five other markets.