Speculative Trading: Investors may drive up stock prices based on hype or rumors rather than fundamental analysis. Optimistic Projections: Companies may issue overly positive forecasts, leading investors to overestimate future cash flows and profits. Market Sentiment: A general sense of euphoria or herd behavior can cause stocks to be priced higher than their actual worth. Low Interest Rates: Easy access to cheap capital can lead to excessive borrowing and investment in stocks, inflating their prices.