Late last year we argued that, on a fundamentals basis, equity markets were overvalued by some 40%. Using the framework of a simple dividend discount model, we reached this figure by asserting that investors’ expectations about the long-run real rate of interest would move into line with investors’ expectations about trend growth across the major economies. The ‘r-g gap’, in short, would close, just as it always had in the past. Since we wrote that note, a resurgence in market…