Ritter, Jay R.; Warr, Richard S. - In: Journal of Financial and Quantitative Analysis 37 (2002) 01, pp. 29-61
If stocks were severely undervalued in the late 1970s and early 1980s, then the bull market starting in 1982 was partly just a correction to more normal valuation levels. This paper tests the hypothesis that investors suffer from inflation illusion, resulting in the undervaluation of equities in...