If everything's expensive, then what do you buy?
That's the riddle facing Yale economist Robert Shiller, who makes the case that both stocks and bonds look expensive now, and "bubbly thinking" abounds.
Shiller's advice is actually three-fold. First, find a proper asset balance for your portfolio. Second, use the strategies of "value investing" to pick the best stocks out there. Third, temper your expectations.
Equity valuations aren't justified, "but I would say that they're not outrageous yet. And given the alternatives, I think people still should have money in the market," Shiller said Thursday on CNBC's "Futures Now." "The lesson now is not to go overboard in the stock market, and also to have enough savings for your retirement, because the market overall is not likely overall to do as well as it has in the past."
When asked what sort of allocation percentages people might want to target, Shiller demurred.
"That's a difficult question! My first advice to most people would be, get a financial advisor. Because the answer to that question depends on your circumstances, your fears, your desire for a bequest to your children, whatever. And so there's no simple answer," Shiller said.
But for this Nobel laureate, the basic idea of asset diversification holds.
"I think that the general rule is, you do want to diversify across all the asset classes. Bonds and stocks look pricey, real estate is starting to get pricey. So, you know, you've got to put your money somewhere," he said.