Next stock on here would be American Express. And once again, we see a stock whose price correlates with earnings as they all do. There's always going to be volatility and there's no perfection here, but there is soundness, reasonleness.
Now, this is overvaluation, but you don't wouldn't necessarily sell. I wouldn't anyway. But yet, even if I didn't, I could have lost 33% of my money if I panicked and sold out in say March of 2016.
If I bought it in April of 2014, if I got impatient, but had I waited and held on to the stock, I would have had this growth and then I had COVID come and you had a drop in earnings, then I had this huge surge.
But clearly, this stock looks like it's overvalued now. And again, if I go into the forecasting graph, it's not quite as overvalued because earnings are expected to grow at 14%.
So to kind of answer the question, how do you know? You do it through reason and analysis.