I’ve posted Entry #11 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s titled What the Word “Overvaluation” Means.
Juicy Excerpt: Huge amounts of economic resources were misdirected because of the widespread confusion over the significance of massive stock overvaluation. Businesses selling high-priced cars, big houses, expensive vacations and other luxury goods earned higher profits than they would have earned had the American consumer possessed a better understanding of his true net worth. Conversely, businesses that provided low-cost products and services were put at a disadvantage because consumers were led to believe by the numbers on their portfolio statements that there was no particular need for them to be frugal at this time.