And how does anybody go about realizing that the company is overvalued? The market doesn't work via black magic. People have to think and reason about it. If I

And how does anybody go about realizing that the company is overvalued? The market doesn't work via black magic. People have to think and reason about it. If I purchase stock in a company one week at $33/share, and the next week that same stock is trading at $23/share, it is highly unlikely that the stock was worth what I paid for it, unless something unforeseeable happened to that company during that week which dropped its value by nearly a third. Market capitalization is only an estimate of real value. The only reason the stock market tends to do such a good job of estimating it, is that so many people are doing their homework before deciding to purchase a share. Articles like this and discussions like this are critical to a healthy market. They help people decide if they should buy or not, and so they promote market efficiency and accuracy.