As if there haven’t been enough financial worries, now a Nobel economics laureate is now signalling the alarm.
According to Yale University’s market scholar Robert Shiller, confidence levels are at an all time low for the 21st Century – with clear indications that investors see the market as overvalued, and vulnerable to collapse.
A growing number of investors believe that US stocks are overvalued, creating the risk of a significant bear market, according to research by Yale University market scholar Robert Shiller.
… [H]is valuation confidence indices, based on investor surveys, showed greater fear that the market was overvalued than at any time since the peak of the dotcom bubble in 2000.
“It looks to me a bit like a bubble again with essentially a tripling of stock prices since 2009 in just six years and at the same time people losing confidence in the valuation of the market,” he said.
However […] it remained impossible to time any fall in the market…
But even news that a pop in the bubble and a subsequent collapse could occur, seems like a foregone conclusion for Shiller, who is hardly surprised:
“It’s been talked about for so long, everyone knows that it’s coming. It’s just not much of a big deal.”
He said the recent bout of volatility “shows that people are thinking something, worried thoughts. It suggests to me that many people are re-evaluating their exposure to the stock market. I’m not being very helpful about market timing but I can easily see aftershocks coming”.
Not a big deal isn’t how most financial analysts and observers would put it, but nonetheless, the warning is there: the stock market bubble is set to burst, and a collapse is likely coming. Aftershocks to follow. Even ivy league financial authorities agree.
Shiller made extended remarks on the situation is this video interview with the Financial Times:
RT reported on Shiller’s comments, noting that the situation “may result in a major bear market – characterized by falling prices and widespread pessimism.”
Though the Federal Reserve is still rumored to be considering a rate increase that could shake the financial landscape that the world moves upon, Shiller dismissed the idea that a stock market crash would be timed specifically with the hike from zero percent interest – even if it altered a seven year norm.
The world knows it is coming. The point is that investors are spooked, and the stock market has clearly been built up on a huge bubble of artificially high prices for things like real estate. The levels easily compare with the potential to match or exceed the 2000 dot com bubble burst.
In fact, things could be much worse than both that crash, and the 2008 global financial crisis that has precipitated this new disaster.