After all, some innovations struggle but succeed, while others arrive too soon for the technology, arrive too soon for the market, or are not commercially successful for a wide variety of other reasons. The rapid reassessment of the business prospects of some e-commerce firms during the course of last year is a reflection of this reality.
Of course, the equity securities of these firms were revalued to reflect these changing assessments. Are stocks today overvalued, correctly valued, or undervalued? I certainly do not know, and I am not aware of anyone who does. As a result, I believe that it would be unwise--and indeed impossible--for the Federal Reserve to target specific levels of valuations in equity markets.