Robert Shiller says the current volatility in stocks is not healthy and could be setting up a...

Robert Shiller says the current volatility in stocks is not healthy and could be setting up a “substantial” decline with the potential for a "major downside" in the current fragile environment. He says housing likely will remain under pressure, the general economy probably will suffer a continuing malaise, and TIPS are his favorite investment.

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Comments (10)
  • inthemoney
    , contributor
    Comments (997) | Send Message
    It is healthy for financial industry, gives them a chance to make money on volatility fast. It is not like out policy makers care about anything else other than their sponsors, and financial industry is the biggest one.
    30 Aug 2011, 10:41 AM Reply Like
  • The Enterprising Value Inve...
    , contributor
    Comments (571) | Send Message
    I like Shiller's lectures online, but this guy has had the same investing thesis no matter what.


    Stocks to him are ALWAYS overvalued. Either growth will be too slow or valuations are outstretched for the level of growth that is likely.


    Give me a break.
    30 Aug 2011, 10:41 AM Reply Like
  • Tack
    , contributor
    Comments (16263) | Send Message
    Imagine, a negative sentiment out of Shiller. I'm shocked. This guy makes Roubini look like a screaming optimist.


    For what it's worth, the times when major downside stock moves get set up are when the VIX is very low and a sense of complacency sets in. That's what we've just observed.


    When volatility is high, and after a major correction, is when you go shopping.
    30 Aug 2011, 10:42 AM Reply Like
  • Econdoc
    , contributor
    Comments (2938) | Send Message
    Great news.


    First of all his premise is wrong, second if stocks decline - better - what is cheap will be very attractive and I am loving buying below 1100 what is worth 1400 on the S&P.


    So just please keep it coming. All of you panickers out there. Keep up the good work. Sell, Sell, Sell.


    30 Aug 2011, 10:43 AM Reply Like
  • Director one
    , contributor
    Comments (62) | Send Message
    this prediction should be a buy a buy signal.....
    30 Aug 2011, 10:46 AM Reply Like
  • Tom Armistead
    , contributor
    Comments (6205) | Send Message
    Shiller likes to look back to the 1800's for his data. It's an affectation, the long-term view carried to where it's a fetish. To him, what happened in the pre-computer days when stocks were thinly traded, accounting was totally bogus, and communications were at snail's pace is just as relevant as what happens in today's relatively honest and transparent markets with instant communication.


    An extremely bullish case can be made using his data from 1987 forward, 1987 was the year of the first computerized crash, an ideal starting point for modern markets.


    I look at that data and I see S&P 1,500, if not this year, then next.
    30 Aug 2011, 10:51 AM Reply Like
  • apberusdisvet
    , contributor
    Comments (3098) | Send Message
    Good point about time frames for analysis. To me, there are only 2 periods that should be analyzed; 1913-1945 when the FED began the systematic destruction of the US economy; and 1971-present; the period when money printing for its own Keynesian sake, became the means to achieve the final end game.
    30 Aug 2011, 10:59 AM Reply Like
  • Business Economics Analyst
    , contributor
    Comments (2532) | Send Message
    I love Robert Shiller. He has provided some excellent data and pretty good books. For a professor of economics (at Yale), he manages to keep it simple and understandable and he makes a lot of sense.
    However, Robert Shiller is a professor of economics, not a professional investor, and that may be for the better. see
    . Many good companies are selling for good prices, cheaper than they have been for many years. The recovery, when it takes place, will likely be faster and stronger than most people predict.
    I switched from being mostly short chinese frauds, to mostly long financial like banks because the value is compelling.
    That said, neither Shiller, myself, nor anyone else who wastes their time coming up with predictions, can accurately forecast the stock market over the short time. Of course, that won't stop the extensive amount of time wasted trying to do so.
    30 Aug 2011, 03:54 PM Reply Like
  • The Enterprising Value Inve...
    , contributor
    Comments (571) | Send Message
    Haha, BEA, you and I are quite alike. I was short a bit of CSKI, CVVT and DGW (still hasn't traded on the pinks.) Made some cash there and look to continue to plow it into financials right now (C, WFC, JPM, BAC and maybe some COF.)


    I also agree on the Shiller comments. Smart economics professor, but a 'not-so-good' investor. There are a myriad of solid companies selling at just rock bottom valuations. As per Ben Graham, the margin of safety in some of these names is huge. Some of the financials are predicting an equivalent downturn in housing prices equal to what we saw from 2005 to the present. No offense to the doomsayers but I will take the opposite side of that bet!
    30 Aug 2011, 04:07 PM Reply Like
  • lowefactor
    , contributor
    Comment (1) | Send Message
    To base investments on 25 years of trading and modelling is a falicy. If current analytical models for valuation is so good then why cant they project 8 hours in advance. As a former ceo fifty percent of what is reported is hype. Over the past 300 yars the world has seen 37 moves to a gold standard due to exaclty the same environment and circumstances as we have today . history is worth something important and relevant. Gold standard evaluation means u.s. becomes number 4 in the world. And that scares everyone. The veil is lifting over 25 years of obfuscated hyper spending get ready for the big adjustment.
    2 Sep 2011, 10:40 AM Reply Like
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