Do firms issue stock when prices seem overvalued? Do they invest or save the proceeds from the sale of overvalued stocks? Is value created or destroyed in the process? This paper uses a unique identification strategy to tackle these questions. We examine the capital investment, stock issuance, and cash savings behavior of financially constrained and unconstrained non-tech manufacturers (“old economy firms”) around the 1990’s technology bubble. Our results suggest that, because they relax financing constraints, high stock prices affect corporate policies. In particular, during the tech bubble, constrained non-tech firms issued equity in response to misvaluation and used the proceeds to invest. They also saved part of those funds in their cash accounts. We do not find similar patterns for unconstrained non-tech firms, nor for tech firms. Our findings do not support the notion that managers systematically issue overvalued stocks and invest in ways that transfer wealth from new to old shareholders, destroying economic value. Rather, our evidence suggests that what appears to be overvaluation in one sector of the economy may have positive externalities for other sectors.