The forward-looking, or ex ante, equity risk premium is important because it is the cornerstone asset allocation. The methodology presented here for estimating the risk premium builds the estimate from the two components that provide an investor actual cash—dividend yield and dividend growth. The expected equity price change should be ignored when considering the future equity price change; price change is too volatile and surprising to be a reliable forecaster. The method presented by the author for estimating the risk premium forecasts a shrinking to nonexistent equity risk premium by 2012. In such a case, conventional asset allocation will be outmoded.