Using monthly stock-market data covering 1871-2020, this paper analyzes how the P-E ratio is related with the future stock-market performance and whether mispricing produces opportunities to time the stock market. The P-E ratio is found to be inversely related with the future stock market...

Using monthly stock-market data covering 150 years from 1871 to 2021, this paper estimates stock market reaction to recession and analyzes whether recession creates buying opportunities. The stock price overreacts to recession. The overreaction is of large magnitude and fairly consistent. Buying...