Irrational exuberance can distort market fundamentals from "summary" of Irrational Exuberance by Robert J. Shiller
The idea that irrational exuberance can distort market fundamentals is a central theme of the book "Irrational Exuberance" by Robert J. Shiller. This concept refers to the tendency of investors to become overly optimistic about the future prospects of an asset, leading them to bid up its price to unsustainable levels. This can result in a disconnect between the market price of an asset and its underlying value, as determined by factors such as earnings, dividends, and interest rates. Shiller argues that when investors are gripped by irrational exuberance, they may overlook or downplay important information that could influence the true value of an asset. Instead, they may rely on speculative fact...
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