This is my understanding:
Fisher effect posits that expected nominal returns on any asset would move one-for-one with expected inflation. That is, when expected inflation increase, the nominal return on stock would also increase, is this correct? Besides, based on the theory, inflation would also cause nominal interest rate (the rate which dividend is discounted to the present to obtain stock price -Present Value Model) to increase, which would decrease stock price.
My problem: The two conclusion above contradicts and I'm confused. Can anyone point the mistake of my thoughts? or PVM and fisher effect cannot be viewed together?