overvaluation
Excessive price assessment
Overvaluation is the assessment of something as worth more than it actually is.
In finance, an overvalued stock trades above what fundamentals justify: The market correction exposed years of overvaluation.
The term applies beyond money—an overvaluation of one's abilities leads to disappointment, and critics may argue for the overvaluation of a celebrated artist's work.
Total equity value
- P/E ratioStock price divided by profits
- equityImpartial treatment or ownership value
- price-to-earningsShare price divided by earnings
- securitiesTradeable financial assets
Sustained price level increase
- burstBreak apart suddenly
- collapseSudden structural failure
- crashSudden violent impact
- maniaIntense, consuming obsession
irrational exuberance · tulipmania · dotcom · housing bubble · unsustainable · overhyped · frenzy · panic
State of being unprotected
- volatilityRapid, unpredictable changeability
- correctionFixing of mistakes
- downgradeReduce in status
- overleverageExcessive debt relative assets
overextension · downside · write-down · impairment · margin call · credit risk · contagion · systemic risk
Currency conversion value
- appreciationRecognition of worth
- forexCurrency trading market
- dollarBasic U.S. currency unit
- yuanChinese monetary unit
euro · currency manipulation · purchasing power · trade imbalance · monetary policy · central bank · foreign exchange · currency war
Biased mental interpretation pattern
- heuristicPractical solving shortcut
- anchoringFastening securely to position
- confirmation biasPreferring belief-supporting information
- optimism biasExpecting favorable outcomes despite odds
halo effect · self-serving bias · overconfidence · wishful thinking · misjudgment · misperception · blind spot · overestimation
market cap
Total equity value
- P/E ratioStock price divided by profits
- equityImpartial treatment or ownership value
- price-to-earningsShare price divided by earnings
inflation
Sustained price level increase
mania · irrational exuberance · tulipmania · dotcom · housing bubble · unsustainable · overhyped · frenzy · panic · correction
exposure
State of being unprotected
- volatilityRapid, unpredictable changeability
- correctionFixing of mistakes
- downgradeReduce in status
overleverage · overextension · downside · write-down · impairment · margin call · credit risk · contagion · systemic risk · deleveraging
exchange rate
Currency conversion value
- appreciationRecognition of worth
- forexCurrency trading market
- dollarBasic U.S. currency unit
yuan · euro · currency manipulation · purchasing power · trade imbalance · monetary policy · central bank · foreign exchange · currency war · capital flows
cognitive distortion
Biased mental interpretation pattern
- heuristicPractical solving shortcut
- anchoringFastening securely to position
- confirmation biasPreferring belief-supporting information
optimism bias · halo effect · self-serving bias · overconfidence · wishful thinking · misjudgment · misperception · blind spot · overestimation · Dunning-Kruger
- housing crisishousing bubble, housing crash, subprime mortgages, foreclosures, subprime loans
- idealizingglorification, idolization, hero-worship, romanticization, pedestalization
- customs valuationappraisement, invoice price, CIF, FOB, customs declaration
- misjudgmentsmisjudgment, mistake, error, blunder, miscalculation
- riskrisk management, risk exposure, risk factors, risk appetite, risk premium
- market bubblesbubble, asset bubble, tulip mania, dot-com bubble, housing bubble
overvaluationundervaluation
Rating below actual worth
underpricing · underestimation · underassessment · underrating · underappreciation