Valuation-Informed Indexing #622: Economists Don’t Pay Attention to the Loss of Consumer Buying Power That Results When Irrational Exuberance Disappears

I’ve posted Entry #622 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Economists Don’t Pay Attention to the Loss of Consumer Buying Power That Results When Irrational Exuberance Disappears.

Juicy Excerpt: Most people who comment on Shiller’s work make an effort to warn investors of the dangers of investing in overpriced stocks. That makes sense. But I rarely see even the most ardent Shiller supporters make the obvious (to my mind) follow-up point. The inevitable disappearance of irrational exuberance (in a price crash) sinks the economy.