Summing It UpIf we throw all these measures into the econometric pot, the model improves somewhat, but the late-1990s equity bubble remains in the chart. Let's coin a phrase and call it "irrational exuberance." The good news is the stock market-GDP relationship was at fair value at the end of March 2003; the market's second-quarter rally has no doubt pushed us back into slight overvaluation at this point.
|The Bubble Remains |
|Source: Howard Simons|