Stock markets might be continuing their run higher this year but Nobel Prize-winning economist Robert Shiller told CNBC Tuesday that a market correction could come at any time and without warning.
"People ask 'well what will trigger it (a market correction)?' But it doesn't need a trigger, it's the dynamics of bubbles inherently makes them come to an end eventually," he said.
On Monday, the Dow, and Nasdaq composite rose to all-time highs after members of the U.S. Senate reached a short-term compromise on the budget to keep the government open through to February 8. The new all-time highs come after a robust year for U.S. equities in Donald Trump's first year as president. Perhaps the largest boost for equities during his tenure so far was the overhaul of the U.S. tax system that saw corporation tax slashed from 35 percent to 21 percent.
Shiller, who won the Nobel Prize for Economics in 2013 for his work on asset prices and inefficient markets, said that markets could "absolutely suddenly turn" and that he believed the bull market was hard to attribute totally to the U.S. political scene.
"The strong bull market in the U.S. is often attributed to the situation in the U.S. but it's not unique to the U.S. anyway, so it's hard to know what the world story is that's driving markets up at this time, I think it's more subtle than we recognize," he said.
Speaking to CNBC on the sidelines of the World Economic Forum (WEF) in Davos, Switzerland, the Yale University professor said it was hard to define scientifically what could trigger markets to correct.
"Something will be invented to explain it once it happens. If you go back to the most famous correction in 1929 there was no (one event) people look back and try to find something but it sounds contrived," he said
This year's WEF is exploring the theme "Creating a shared future in a fractured world" and organizers hope that its 3,000 or so participants will discuss the world's most pressing problems and arrive at more collaborative solutions.