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.”  Shiller explains that after sending out 3,250 questionnaires to both individual and institutional investors, he found evidence that differed sharply from the findings reported by […]

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 of these factors. Valuations: Using his cyclically adjusted price-earnings ratio (CAPE), Shiller points out that the current level of 30 is “high,” which could imply […]

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 his strategy don’t “understand exactly how he makes his decisions, they don’t have his edge,” and, he adds, “must come to the party late and […]

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 outside the U.S. would avail investors of lower valuations. “You can go practically anywhere else in the world and it’s lower,” he argues. The CAPE […]

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 for the American stock market over the next 10 years or so, but it does not tell us for sure nor does it say when […]