Tags: Shiller | diversification | value | expectations

Yale's Shiller: Stocks Are Pricey but 'Not Outrageous Yet'

Thursday, 21 Aug 2014 07:59 PM

By Dan Weil


Nobel laureate economist Robert Shiller of Yale University has said recently that both stocks and bonds look a little bubbly and that the housing market may be headed in that direction as well.

So how should investors cope? Diversify your portfolio, seek value stocks and keep your expectations in check, he told CNBC

"The general rule is you want to diversify across all the asset classes," Shiller said. As for how to weight different assets, "there's no simple answer," he said.

Editor’s Note: Get These 4 Stocks Before 399% Stock Market Rally!

"My first advice to most people would be to get a financial adviser, because the answer to that question depends on your circumstances, your fears, your desire for a bequest to your children, whatever."

As for stocks, while they are pricey, "they're not outrageous yet," Shiller said.

"Given the alternatives, I think people still should have money in the market. The lesson now is not to go overboard in the stock market and to have enough savings for your retirement, because the market is not likely to do as well as it has in the past."

Shiller's cyclically-adjusted price-earnings ratio for the S&P 500, based on 10 years of earnings, stands at the fourth highest level since 1881.

With the S&P 500 hitting a record high Thursday for the first time since July 24, many investors remain bullish.

"The market is really in a sweet spot for U.S. stocks, fundamentals continue to be very good," Jeff Kravetz, a regional investment director at US Bank’s Private Client Reserve, told Bloomberg.

Editor’s Note: Get These 4 Stocks Before 399% Stock Market Rally!

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