Individual investors are the least bullish they've been for more than 16 years, according to one of the country's greatest economists.
Nobel Prize-winning economist Robert Shiller is seeing worrying signs in the monthly sentiment survey at the Yale School of Management.
"I'm concerned. It's not just the one-year confidence, but it's also the valuation confidence" said Shiller on CNBC's "Halftime Report" on Tuesday. "Most people are worried. It's the high price to earnings ratio — or I'd use the high CAPE ratio — so you have a weakening of optimism and you have a concern about overpricing."
The CAPE is Shiller's Cyclically Adjusted Price to Earnings ratio, which looks at the relationship over a 10-year period and is currently at its highest level since the dotcom bust.
At the same time, individual investors are now the least bullish since the start of the Yale survey back in 2001, according to the economist.
To be sure, institutional investors are more bullish than individual investors, but their reading is now all the way back down to levels seen prior to the post-election spike at the end of 2016.
Shiller, a Yale University economics professor, said he believes much of the current pricing has to do with the mentality of the "Trump boom" after President Donald Trump's victory in 2016. His research in financial market volatility and asset pricing is renowned by academics and investors alike, culminating in his Nobel Prize in 2013.
"I think the strength of the Trump boom is still a factor, there's something psychological going on," he added. "We're so preoccupied with other things — notably Donald Trump and the revolution that he might be making in taxes or other things — that might be affecting our thinking."
Responding to questions on current Republican tax plans, Shiller said it would be a "downer" for stocks if the proposals fail.
"We've already got a sense that it's more difficult than we thought with the inability to change the health care system. So people have already gotten a clue on that," he said. "The enthusiasm in the markets isn't just looking at tax rates. It's just a general level of sense that we have a government that supports capitalism and that will foster an atmosphere of entrepreneurship and business."