Nobel Prize-winning economist Robert Shiller has a grim message for investors: Save up, because in the years ahead, assets aren't going to give you the type of returns that you've become accustomed to.
In his third edition of "Irrational Exuberance," which will drop later this month, the Yale professor of economics warns about high prices for stocks and bonds alike.
"Don't use your usual assumptions about returns going forward." Shiller recommended to investors in a Thursday interview on CNBC's "Futures Now."
He says that stock valuations look rich. In fact, Shiller's favorite valuation measure, the cyclically adjusted price-earnings ratio (which compares current prices to the prior 10 years' worth of earnings) is "higher than ever before except for the times around 1929, 2000, and 2008, all major market peaks," he writes in his new preface to the third edition.
"It's very hard to predict turning points in markets," Shiller said on Thursday. His CAPE measure of the S&P 500 "could keep going up. ... But it's definitely high. By historical standards, it's up there."
Meanwhile, Shiller said that bond yields, which move inversely to prices, "can't keep trending down" and "could [reach] a major turning point in coming years."
It's no surprise, then, that Shiller expects little in the way of asset returns—meaning Americans will have to rely more heavily on the piggy bank.