I’m sorry I didn’t read the book yet, but could you tell me in layman’s terms what caused stock market valuation to shift to a higher level, and if that shift is indeed permanent.
My understanding is that stock market valuation made a permanent shift relative to bonds when comparing bond yields and stock dividends. In other words stock price appreciation became valued above dividends. Not unlike the way that RE investors came to value potential cap gains above rents.
However, that does not preclude price declines. As we have seen, despite this permanent shift in comparative yields, stocks still experience sharp declines in price when they get irrationally overvalued.
