Robert Shiller: Stocks Look ‘Pretty Frothy,’ Home Prices ‘Getting High By Historical Standards’

Last investment-related piece for the day. Yahoo! Finance Editor-In-Chief Andy Serwer recently interviewed Yale economist Robert Shiller in a “Market Pulse” segment. Serwer brought up the stock market and housing in his chat with the Nobel Prize winner, who correctly-called the dot-com and housing busts of the last decade. These days, Dr. Shiller once again has concerns about both. From their discussion published September 25 on the Yahoo! Finance website:

SHILLER: I think there’s a little bit of over-exuberance in the stock market at the present time.
SERWER: Right. Even with this recent correction?
SHILLER: The correction that we had in August brought the market down 10 percent. But it’s halfway back up again. So it’s still looking pretty frothy

(Editor’s note: Bold added for emphasis)

Dr. Shiller added later:

The market is highly-priced by traditional- well, this isn’t a traditional measure this is a measure that I and my colleague John Campbell developed. On top of that, I have survey data showing that people think the market is overpriced. The percent who think that is quite high now. So, I think this creates a little bit of fear that there could be a correction. When we saw the correction in August of this year there was I think some anxiety thrown into people’s hearts when they also feel that the market almost tripled between 2009 and 2014- it’s really pretty high. And I think there could be a further correction. I certainly am not forecasting that because nobody really knows what the stock market will do. But I think we’re in some danger of that. My instinct would be not to take any extreme moves, not to pull out completely. But also not to be heavily exposed to the market. I think it’s worrisome at this point. Worrisome but not horrible. I think you keep something in the market. But not too much.

(Editor’s note: Bold added for emphasis)

On housing, there was this exchange:

SERWER: We’re seeing the housing market heating up again. Do you think that this is a sustainable recovery?
SHILLER: Well, home prices have been going up. But they’re still not in real terms close to the previous peak in most cities… Is this sustainable? I’m starting to worry a little bit. It’s getting high by historical standards. And it’s another cause for concern. But it’s not like the stock market yet in terms of valuation.

(Editor’s note: Bold added for emphasis)

“Shiller: Stocks and housing are overvalued—here’s what to do about it”
Yahoo! Finance Video

Christopher E. Hill
Survival And Prosperity (

(Editor’s note: I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein)

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Tuesday, September 29th, 2015 Crash Prophets, Housing, Investing, Stocks

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