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Trading glossary

What is Overvalued?

Fundamental AnalysisBeginner

A stock is considered overvalued when its price exceeds its estimated fair value based on fundamentals. High P/E ratios, euphoric sentiment and rapid price increases can all indicate overvaluation. An overvalued stock isn't guaranteed to fall — momentum can push prices higher for extended periods.

Related terms: Undervalued P/E Ratio Fair Value

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