Robert Shiller's Real Track Record

At Deal Breaker, Bess Levin highlights Alan Greenspan’s predictive abilities. In the linked NY Post article, I was left speechless by Terry Keenan’s touting of Robert Shiller’s track record.

No wonder the average homeowner is confused. That's why when I want to really know about the real state of the real estate market, I want to hear from someone who has been predicting this whole debacle for years now - a spot-on observer like Robert Shiller of Yale University.

Shiller is in no need of reputation repair. Not only did he warn of the housing mess, he also called the Internet bubble with remarkable precision in his book "Irrational Exuberance."

Sorry Terry, but Shiller hasn’t been spot on—he’s been way off the mark. Shiller is a perma-bear and investors who followed his advice lost out in a big way. In the last five years, the S&P 500 has doubled. Shiller missed that and every other rally. He was a bear long before the market nose-dived and he’s continued to be a bear ever since.

For some reason, there seems to be a strong bias to celebrate people who warn of market crashes. Perhaps it’s more dramatic. If you’re always warnings of a market crash, guess what? Sooner or later you’re going to be right! You're suddenly a wise market observer. No matter what you say after, your reputation can live off that forever. The people who make the undramatic prediction “no, don’t worry, everything’s ok” rarely get credit for being right.

Comments

[vineet:]

Dr. Shiller is not playing market or real estate. He is an economist and based on the education he got and economic theories he is merely pointing out the potentail outcome of the model and the assumption. He is not saying or ever siad that this is it.

Also, pl understand, his model will continue to change as it is actively updated for a whole lot people are reacting or not reacting to the economy, fiscal & monitory policy.

If you take Dr. Shiller to be a market predictor righyt on spot, my friend you are making an incorrect assumption in your own model. Pl put Dr. Shiller correctly where he belongs. Your model will be less error and assumption prone.

2007 Sep 27 04:14 PM

[NoFate:]

Dr. Shiller has provided us with the only accurate housing price index in existence. God help us if we were dependent on NAR for this information!

Further, he is the best economist at predicting bubbles ...I don't think he would claim more than that.

Finally, for you to discredit him for more than that says more about you than it does Dr. Shiller.

2007 Sep 27 11:45 PM

[NoFate:]

Sorry, I should have said "...attempt to discredit him."

2007 Sep 28 01:25 AM

[Quaker:]

This is a silly post. It makes the assumption that stock investors who ride bull markets up are smart. This belies both experience and common sense. OBVIOUSLY, since treasury bonds beat the markets in the last ten years, perma bears made more money! Also, for the "bulls" to have even made the market, they would have been overweight commodities which absolutely didn't happen.

Anybody who bought real estate and are currently holding it are idiots. Like the tech bust in 2000, this bust was so predictable it was ridiculous. The fundemantals for real estate are laughable and they've been laughable since 2005. No one who has even a clue what duration and amortizations are would have even dreamed of buying a house in the last year, especially a vacation home.

Today we have the lowest number of people per home in history, no affordibility, the highest vacancy rate in history, the highest ownership rate in history, the lowest equity per household in history, the highest credit card debt in history, the highest auto loan debt in history, the lowest equity in an auto loan in history, the longest auto loan amortization in history, rapidly falling home prices, rapidly falling auto prices, the highest auto inventory in history, the highest retail space per capita in history and food and energy prices rising at 3X the official inflation rate.

Yea, right.... This real estate depression is going to be a BIG surprise.

2007 Sep 28 11:04 AM

[Eddy Elfenbein:]

He may be an economist but he has routinely made comments about the stock market and he's been mostly wrong about it. I repear: He hasn't been "spot on."

NoFate: I don't claim to discredit him. I have no idea where you get that from. Do you even read what you comment on? Please. If you don't even read the posts, don't comment! It makes you look silly. The facts speak for themselves. Shiller was a bear back in 1996 and he's been a bear all along. He's been wrong.

Quaker: Your comment is one of the silliest things I've ever read on Seeking Alpha. Since you didn't address anything in the post, I'll simply dismiss your comments as irrelevant.

2007 Sep 28 01:18 PM

[Eddy Elfenbein:]

He may be an economist but he has routinely made comments about the stock market and he's been mostly wrong about it. I repear: He hasn't been "spot on."

NoFate: I don't claim to discredit him. I have no idea where you get that from. Do you even read what you comment on? Please. If you don't even read the posts, don't comment! It makes you look silly. The facts speak for themselves. Shiller was a bear back in 1996 and he's been a bear all along. He's been wrong.

Quaker: Your comment is one of the silliest things I've ever read on Seeking Alpha. Since you didn't address anything in the post, I'll simply dismiss your comments as irrelevant.

2007 Sep 28 01:18 PM

[kdo:]

It's funny you mention 1996. If you go back, it's 1995 when the bubble really started to blow.

Check this out:
finance.yahoo.com/char...=^gspc;range=19870205,...

Using 1996 as a number isn't exactly something that would dissuade me from listening to him.

2007 Sep 29 01:41 AM

[Paul Meisel:]

I agree with your comment that bearish predictions seem more dramatic. Remember the hey-day of Joe Granville?

The market is not a zero sum game; over the long run it goes up.

2007 Sep 28 02:48 PM

[rhizome:]

The reason predictors of crashes are more sought after has to do with the distribution of returns in a particular market. Any long bull market has a positively skewed distribution of returns. In economics it is referred to as a long-memory processes or something resembling Brownian motion. The long-memory process tends to persist in one direction for a relatively long period of time until a brutal reversion takes place. Everyone wants to be the person ringing the bell a little ahead of the brutality. Nevertheless, it is much harder to get the timing of a crash just right because the market tends to surprise everyone and go further than anyone expected.

2007 Sep 29 12:29 PM

[datacheck:]

So, you still think Shiller was wrong?

2008 Oct 09 07:10 PM