The Role of Signal Extraction in the Overvalued Market

I came from this background of thinking about, you know, monetary economics, but also rational expectations. And I had an academics mind toward it that well overvaluation should not at some point be rational. That was just not proving out very well. So basically in the late 90s, I said, all right, how do I actually distinguish between an overvalued market that continues to advance and one that drops like a rock? The answer is: Do we see uniformity or do we see divergence and deterioration?

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