Robert Shiller, Nobel Laureate and Professor at Yale University, is worried about valuation levels of the stock market, based on his famous valuation model, cyclically-adjusted price-earnings (CAPE) ratio.

With the US stock market at its historical high, CAPE is now at 29x, which is substantially above its long-term average of about 15x.


U.S. Stock Markets 1871-Present and CAPE Ratio.
Source: Home Page of Robert J. Shiller at Yale  http://www.econ.yale.edu/~shiller/

"The market is quite expensive and that investor optimism is tinged with plenty of worry," Mr. Shiller wrote in the New York Times, "(but) none of this tells us where the market is going tomorrow, but it suggests that some caution is advisable, and that returns over the next decade or so are likely to be constrained."

Robert said he don’t know where the market will go this month or this year and it could well rise a lot. But investors should not let themselves be tempted to bet aggressively on the Trump bull market.

Robert Shiller is an American Nobel Laureate of economics in 2013, economist, academic, and best-selling author. He currently serves as a Sterling Professor of Economics at Yale University and is a fellow at the Yale School of Management's International Center for Finance.

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