Tags: Shiller | tech | stock | bubble

Robert Shiller: 'It Looks and Feels' Like a Tech-Stock Bubble

By    |   Thursday, 10 April 2014 03:45 PM

Technology stocks have soared over the last year, putting them in bubble territory, says Nobel laureate economist Robert Shiller of Yale University.

The S&P 500 Information Technology sub-index has climbed 25.2 percent during that period.

"You can never positively identify a bubble, but it looks and feels like a bubble [in tech stocks]," Shiller told Bloomberg News. "It has a story that goes with it, and there is an excitement that goes with it. And it is going to turn like it does with other bubbles."

This bubble isn't as extreme as the one experienced by the stock market in 1999, Shiller said. "The market overall is highly priced, but it isn't like 1999."

Shiller's cyclically adjusted price-earnings ratio, which accounts for 10 years of earnings, now stands at 25, compared to 46 at the beginning of 2000, he said.

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"That [the bubble of 2000] was driven a lot by tech stocks, but it was a broader phenomenon," Shiller said. "So the stock market is on the high side and being driven by technology recently. But it's not like it was then."

Market participants see signs of froth in the junk bond market, too.

"The game has changed in the high-yield market, and it has become more sophisticated than it was two or three years ago,” Sabur Moini, a high-yield fund manager at Payden & Rygel, told the Financial Times.

"You have to keep asking yourself how much more extra 'risk' you want to keep adding to your portfolio in order to keep the same level of returns."

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Technology stocks have soared over the last year, putting them in bubble territory, says Nobel laureate economist Robert Shiller of Yale University.
Shiller, tech, stock, bubble
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2014-45-10
Thursday, 10 April 2014 03:45 PM
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