Definition of Overvalued

What is the definition of the term "overvalued" as it applies to the stock market? What does the term overvalued mean?

When somebody claims that a stock is "overvalued", they are saying that the stock is currently trading for more than it is worth.

Overvalued - Definition - FinanceNow, calling a company "overvalued" is obviously completely subjective - some may believe that a company is overvalued, while others might believe that it is undervalued.

The most common way to value a company is through its Price/Earnings ratio. The problem with the Price/Earnings ratio, of course, is that it doesn't properly value fast-growing companies that may be closing to turning the corner and reaching profitability.

Is a stock overvalued, undervalued or valued perfectly? These are the questions that haunt investors and traders on a daily basis.

-- Articles That Mention Overvalued:

Berkshire Hathaway and Currently Valued at the Same Amount

David Einhorn: "We Are Witnessing Our Second Tech Bubble in 15 Years"

Tesla Motors Drops 14.5% Following Q3 Earnings Release

Facebook Continues to Crater

Zynga and Groupon - Two Badly Broken IPOs