"Irrational Exuberance" is a phrase used by the Chairman of Federal Reserve Board, Alan Greenspan, in a speech given at the American Enterprise Institute during the Dot-com bubble of the 1990s. (www.wikipedia.org). The phrase was interpreted as a warning that the market might be somewhat overvalued. Robert Shiller, the famous economist and the best seller wrote the book with the same name in 2000.
In the book of the same name, Shiller talks about several phenomena in the late 1990s. The analysts' optimistic forecasts were a typical factor which contributed to the "Irrational Exuberance". "According to data from Investment Research about the recommendations on some 6000 companies, only 1.0% of recommendations were "sells" in late 1999 (while 69.5% were "buys" and 29.9% were "holds")". This kind of over-optimistic forecasts helped created an untrue environment of investment which can be described as "Irrational Exuberance".
Sources:
Shiller, Robert J. 2005. "Precipitating Factors: The Capitalist Explosion, the Internet, and Other Events" in Irrational Exuberance. Princeton University Press. New Jersey.
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