The U.S. stock market, which reached record highs Tuesday, may be poised for a correction, but it's not raging out of control, says Nobel laureate economist Robert Shiller.

"The market is high, but it’s not alarming yet and could go much higher," he tells MarketWatch in an interview at The Economist magazine's Buttonwood Gathering.

The cyclically adjusted price-equity (CAPE) ratio that Shiller created with Harvard economist John Campbell now totals 25. That’s much higher than its historical average of about 16, but much lower than its 2000 peak of 46, Shiller points out.

Editor’s Note: 5 Reasons Stocks Will Collapse . . .

The 2000 reading equated to zero return for stocks over the next 10 years. The current level is consistent with annual returns of 2.5 percent over the next decade, Shiller explains.

That's not spectacular, but not awful either, he argues.

Prior to his interview, Shiller spoke on a panel at the conference and said talk of housing bubbles is coursing around the world. For instance, Brazil may be in a bubble, he explained, as housing prices doubled in inflation-adjusted terms over the past five years.

Shiller calls bubbles a type of "social mental illness."

The Yale economist isn't the only one talking about a potential correction for the U.S. stock market.

"Earnings haven't been amazing, but they've been steady and sustainable, which the market likes enough to help us reach all-time highs," Andres Garcia-Amaya, global market strategist at J.P. Morgan Funds, tells Reuters.

"When the [earnings] season ends, and we focus on the macro [economy] again, that probably won't be good for the market."

Editor’s Note: 5 Reasons Stocks Will Collapse . . .

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