Óverðmæt

Óverðmæt is an Icelandic adjective used to describe assets, markets, or prices that are considered to exceed their intrinsic or fundamental value. In English, it is typically translated as overvalued or overpriced. The term is common in economic and financial discourse, including analyses of stocks, real estate, currencies, and commodities, as well as in public commentary on market bubbles.

In practice, assessing whether something is óverðmæt involves comparing market prices with estimates of intrinsic value derived from fundamental analysis. Common approaches include discounted cash flow models, and valuation multiples such as price-to-earnings, price-to-book, and dividend yield. Because intrinsic value is uncertain and market conditions change, valuations regarded as óverðmæt can remain so for extended periods, or correct sharply when new information emerges or risk appetites shift.

A market or asset may become óverðmæt for a variety of reasons, including speculation, excessive liquidity, optimistic growth expectations, or structural changes. Recognizing overvaluation is not an exact science, and critics warn against relying solely on price signals; others argue that prices reflect information not yet captured by fundamentals.

Óverðmæt is often discussed in relation to market efficiency and financial stability, and it is a common topic in journalism, academic writing, and regulatory discussions in Iceland.