Valuation-Informed Indexing #590: It’s Human Emotions That Swing Wildly, Not the Economy or the Value of the Stock Market

I’ve posted Entry #590 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called It’s Human Emotions That Swing Wildly, Not the Economy or the Value of the Stock Market.

Juicy Excerpt: In the pre-Shiller era, investor emotions were stable but the economic realities and the stock values that reflected them were not. Shiller turned those understandings of how things work on their head. It’s investor emotion that is swinging wildly from irrational exuberance to irrational depression. Knowing that that is so, we no longer can assume that stock price changes reflect changes in the value of the underlying stocks. It could just be that investors are assigning inappropriate prices because of their emotionalism.