U.S. Corporate Earnings Trend Could Be Short-Lived

In a recent article for Financial Advisor magazine, Robert Shiller discusses whether today’s share prices are justified by the growth in reported earnings. “With prices and earnings moving together on a nearly one-for-one basis,” Shiller writes, “one might conclude that the US stock market is behaving sensibly, simply reflecting the US economy’s growing strength.” But Shiller argues that earnings are volatile, adding that “sudden sharp increases tend to be reversed within a few years. This… Read More

Shiller: Stocks Could Rise Higher Before They Fall

According to an article in Bloomberg, Nobel laureate Robert Shiller says “The stock market could get a lot higher before it comes own. It’s highly priced, but it could get much more highly priced. It’s a risky market now.” In an interview with Bloomberg Television, Shiller said that President Trump’s support for corporate America is driving both sentiment and market strength: “The U.S is just doing great right now in terms of the strength of… Read More

Robert Shiller on the Pricey U.S. Market

Nobel Laureate and Yale professor Robert Shiller recently wrote for the Project Syndicate about the comparative levels of market valuation across countries and how, “right now, the United States is leading the world.” He adds, “What everyone wants to know is why—and whether its stock market’s current level is justified.” Shiller advocates using the cyclically adjusted price-earnings ratio (CAPE)– that he developed 30 years ago with Harvard professor John Campbell—and discusses the importance of evaluating… Read More

Shiller: Another Bear Market Could Happen

The kind of panic that ensure thirty years ago, on October 19th, 1987, could happen again. This according to Yale professor Robert Shiller in his recent New York Times article. While Shiller points out that regulatory and technological progress has ruled out an exact repeat of that day, the results of a survey he conducted within four days of the event revealed that “fundamentally, that market crash was a mass stampede set off through viral contagion.” … Read More

Shiller Tracks Past Bear Markets

In a recent article for MarketWatch, Yale professor and Nobel Laureate Robert Shiller shares insights on past bear markets in the U.S. and how the current market environment resembles the periods preceding them. Citing the “conflicting messages” of “high valuations following a period of strong earnings growth and very low volatility,” Shiller shares data he collected by reviewing 13 U.S. bear markets since 1871 (a drop in the market by at least 20%) regarding each… Read More

Shiller Says There Are No Genius Investors in the Long Run

While some investing approaches can work for long periods of time, over the long run, “without deep expertise, it makes little sense to veer much from a simple market portfolio—one that seeks to match the overall performance of the market, and not beat it.” This according to Yale professor Robert Shiller in a recent New York Times article. Using the example of Warren Buffett’s investing prowess, Shiller underscores that investors who have attempted to mirror… Read More

Shiller Says Bull Could Run for a While

When asked for his outlook on the market in a recent CNBC interview, Nobel Laureate Robert Shiller says investors should keep some stocks in their portfolio because the market “could go up 50 percent from here.” The economist, who helped develop the cyclically-adjusted price-to-earnings ratio (CAPE) market valuation measure, says that although the current CAPE (29) is above the 17-year historical average, he isn’t calling for a market decline. That said, he notes that diversification… Read More

Shiller Says Market Valuations Warrant Caution

Nobel Laureate Robert Shiller writes in a recent New York Times article that “today’s CAPE is sending a troubling message,” noting that the market valuation ratio he developed (which now stands at nearly 30) was higher only in 1929 and around 2000 (when it hit 33 and 44, respectively). In both instances, Shiller writes, “market declines followed those very high readings.” He qualifies his comments, however, by clarifying that the CAPE “suggests a dim outlook… Read More

Robert Shiller Shares Insights on the Trump-Bump

In a February interview with Bloomberg, Yale University professor Robert Shiller says, “I think the Trump effect is really important.” While Shiller, winner of the Nobel Prize in Economics, says he can’t speak authoritatively on what’s ahead because that would be “guessing human psychology,” he says that the current Shiller P/E ratio (also referred to as the CAPE) of 29 is “very high” and could spell trouble. It’s not at the level it was in… Read More

Shiller on Behavioral Economics

An interview with Robert J. Shiller, the recipient of the 2013 Nobel Prize in economics, was recently published in Pacific Standard magazine. The discussion centered on the advent of behavioral economics—the introduction of other social sciences into the field of economics. “It’s a revolution in economics that has taken place over the past 20 years or so. It’s bringing economics into a broader appreciation of reality,” says Shiller. While traditional economics has focused on the… Read More