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Yale’s Robert Shiller: ‘We Should Be Worried About Steep Decline’ in Stocks

“Many investors are nervous that the stock market may soon plunge, and that concern is understandable, says Nobel laureate economist Robert Shiller of Yale University.

“We should already be worried about a steep decline,” he tells Forbes. “The market is highly priced, but by my standards not quite as highly priced as it was in 2007.”

Shiller is referring to his cyclically adjusted price-earnings ratio, which is based on the last 10 years of earnings. The ratio reached 27 in 2007, when the stock market peaked, and stands at 26.1 now.

“That’s close, and that is a cause for concern,” Shiller argues. “So it might be a time to tilt one’s investments away from the U.S. Don’t get greedy.”

The S&P 500 hasn’t seen a 10 percent correction in 32 months….”

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