Chapter 34. Short Selling and the Equity Premium Puzzle
Jørgen Vitting Andersen
Using growth theory it is argued that the worlds financial markets since the mid 19'th century have been in a state of “broken symmetry” which favours long term bull phases of growing financial markets, thereby also giving one possible explanation of the so called equity premium puzzle. The possibility of a “broken symmetry,” leading to bull markets, arises as a combination of wealth effects, as well as the bias of investors taking predominantly long instead of short positions. ...

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