Re-specified Fed model comparing S&P 500 earnings yield with after-tax corporate bond yield (average rating=Baa).

http://en.wikipedia.org/wiki/Fed_model

Re-specified Fed model comparing S&P 500 earnings yield with after-tax corporate bond yield (average rating=Baa). Before 1982 the equilibrium could not be reached due to legal limitations in repurchasing shares (SEC Rule 10b-18).

Is the Fed model miss-specified? Thirty years of investor money illusion (left) or deliberate company policy (right)?