He is particularly concerned with housing, stocks and cryptocurrencies, where he sees a “wild west” mentality among investors.
“I didn’t do it in print. I said so, ”the Yale University professor told CNBC’s“ Trading Nation ”on Friday.
Even though the stock and crypto record has taken a hiatus over the past two weeks, Shiller is worried. He is particularly worried about the latest real estate boom.
“In real terms, house prices have never been higher. My data goes back over 100 years, so that’s something, ”said Shiller, co-founder of the S&P CoreLogic Case-Shiller House Price Index. “I don’t think it’s all about central bank policy. There is something going on in the sociology of markets. “
Over the past three decades, Shiller has found that home prices seem to be the driving force behind housing starts. He sees the model emerge again and highlights it in a special painting.
According to Shiller, the current home price action is also reminiscent of 2003, two years before the fall began. He notes that the decline happened gradually and eventually collapsed around the 2008 financial crisis.
“If you go out for three or five, I could imagine they would [prices] be substantially lower than they are now, and maybe that’s a good thing, “he added.” Not from an owner’s point of view, but it’s from an owner’s point of view. ‘a future owner. This is a good thing. If we have more houses, we are better off. “
Shiller, an expert on how our emotions influence financial decisions and author of “Narrative Economics: How Stories Go Viral and Drive Major Economic Events,” also sees mass psychology playing a significant role in the stock market’s epic rebound.
Since the March 2020 low, the S&P 500 and the Dow have risen nearly 90%, while the high-tech Nasdaq has risen just over 100%.
Shiller, who viewed stocks as very expensive at the start of the year, warns inflation fears could ultimately push long-term assets down.
Crypto’s ‘Ultimate Source of Value Is So Ambiguous’
“It’s a very psychological market. It’s awesome technology, ”said Shiller. “But the ultimate source of value is so ambiguous that it has a lot to do with our stories rather than reality. “
Even Shiller was tempted.
“I thought I would buy them to feel the effect. A lot of people actually do, ”he said. “I have never bought bitcoin. Maybe I should be active in this market. “
Based on Bitcoin’s latest wild swings, some of the excitement may evaporate. As of Friday’s close, it has fallen more than 30% in the past two weeks.