Shiller Says Stock Market is (Probably Too) Expensive

Here is an interesting interview with Robert Shiller.

He thinks this is 1930, not 1932, so it is too early to invest.

He says for young people "go for it" and invest as if it were a lottery ticket with the hopes to "hit it big". But for those who are in retirement to be cautious because what looks like low prices can still fall by 50%.



Notice two things that show that a lot of this "performance" is smoke and mirrors:

1. The interviewer is Henry Blodget, a former technology analyst guilty of breaking the law and prevented from working in the industry has now moved to "financial entertainment" and does this interview.
2. Shiller confesses to doing what a lot of highly trained academic financial ecnomists do: he writes about markets using finance equations but when it comes to investing he admits he is "seat of the pants". This self-delusion about decision-making was discussed in the book "Gut Feelings" by Gert Gigerenzer. It is disconcerting to realize that leaders in the field of mathematizing finance ignore their own analysis when it comes to their personal finance!