GO
Loading...

Robert Shiller: I’m still investing in the stock market

Nobel prize-winning economist Robert Shiller told CNBC at the World Economic Forum that he is still investing in the stock market despite warning of bubble-like conditions.

Shiller said that his own long-term valuation metric for stock markets, which measures price-to-earnings based on average inflation-adjusted earnings over the previous 10 years, was currently high at 25. But it was still well below the record high of 46 reached in 2000.

(Read More: Nobel Prize winner warns of US stock market bubble)

Robert Shiller
Getty Images
Robert Shiller

In December, Shiller warned in an interview with Germany's Der Spiegel magazine that the sharp rise in U.S. equity prices could be leading to a dangerous bubble.

"I'm not sounding the alarm yet. But in many countries the stock price levels are high, and in many real estate markets prices have risen sharply...that could end badly." he said.

"I find the boom in the U.S. stock market most concerning."

U.S. stocks ended 2013 at record highs, with the S&P 500 posting its largest annual jump in 16 years and the Dow its biggest gain in 18 years. While across the Atlantic, the pan-European benchmark STOXX 600 clocked gains of 17 percent, after a year in which faith in a euro zone recovery returned to the markets.

Goldman Sachs analysis this month said that a stock market correction is approaching the level of near certainty, citing a major paradigm shift for Wall Street. The firm's strategists called the S&P 500 valuation "lofty by almost any measure" and attached a 67 percent probability to the chance that the market would fall by 10 percent or more.

(Read More: Housing market could be facing another bubble: Shiller)

In December, Shiller, who co-founded the Case-Shiller index of home prices, shared an equally bearish view on the U.S. housing market. He told CNBC that the market could be in the early stages of yet another bubble.

"In the housing market, it has its own momentum right now as people see it coming back. We're sort of in the beginnings of another housing bubble," he said.

Shiller won the Nobel prize for economics in October for his research that has improved the forecasting of asset prices in the long term. He was awarded the 8 million crown ($1.25 million) prize alongside fellow economists Eugene Fama and Lars Peter Hansen.

By CNBC.com's Matt Clinch. Follow him on Twitter @mattclinch81

Symbol
Price
 
Change
%Change
S&P 500
---

Featured

  • Argentina, Buenos Aires

    The global elite have stumbled on an emerging market sell-off that served as a reminder of the risks the global economy still faces.

  • A logo sits on a sign at the World Economic Forum in Davos, Switzerland, on Thursday, Jan. 23, 2014.

    Sure there was talk of women's issues at Davos but this female CEO says one of the questions she got asked a lot was: Are you here as a spouse?

  • The World Economic Forum logo in Davos, Switzerland.

    Here’s a five-point reality check for why people need to stop bashing Davos as an irrelevant gathering of the elite. By the executive director of Wharton's Risk Management Center.

  • Marissa Mayer

    Negotiations over the U.S. debt ceiling are still one of the biggest risks facing the world, according to Yahoo CEO Marissa Mayer.

Videos

Latest Special Reports

  • An era of innovation dominated by secretive corporate labs is ending. Time for you to help crowdfund the future.

  • Tips on the best-performing portfolio strategies and global market trends that can help you become a smarter investor.

  • CNBC and Institutional Investor host the 4th Annual Delivering Alpha Conference.