Tags: Shiller | stocks | homes | investment

Yale's Shiller: Stocks May Beat Out Homes as Best Investment Right Now

By    |   Thursday, 04 December 2014 09:10 PM

While the stock market historically averages gains of about 9 percent a year, the average increase for home prices between 1968 and 2004 was 6.4 percent.

So it's no wonder that Nobel laureate economist Robert Shiller of Yale University says that stocks may trump home ownership as an investment for now.

"It would be perhaps smarter, if wealth accumulation is your goal, to rent and put money in the stock market, which has historically shown much higher returns than the housing market," Shiller said in a panel discussion Thursday, CNNMoney reports.

Both the S&P 500 index and the Dow Jones Industrial Average hit record highs Thursday.

Shiller noted that the Swiss have done quite well financially despite a "very low" home ownership rate.

To be sure, Shiller isn't doing handstands over stocks, and he's not averse to the idea of home ownership.

His cyclically-adjusted price-earnings ratio for the S&P 500, based on 10 years of earnings, stands at 27.2, trailing only the levels of 1929 and 2000.

When it comes to home ownership, "if you don't take out a home-equity line of credit or do something like that, you will accumulate wealth," Shiller said.

As for the short-term outlook for stocks, December represents the second best month for the Dow Jones Industrial Average over the past 50 years, according to Bespoke Investment Group. 

The Dow has advanced 1.6 percent in December on average during that period, registering increases almost 70 percent of the time.

Sam Stovall, U.S. equity strategist at S&P Capital IQ, certainly sounds bullish. "In support of history, we think the S&P 500 should do well in December," he told USA Today.

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Nobel laureate economist Robert Shiller of Yale University says that stocks may trump home ownership as an investment, at least for now.
Shiller, stocks, homes, investment
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2014-10-04
Thursday, 04 December 2014 09:10 PM
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