Using long term analysis, Professor Robert Shiller, macromarkets chief economist at Yale University and the co-creator of the S&P/Case-Shiller Home Price Index, told CNBC on Friday that the S&P 500 may reach 1430 by the year 2020.
"The problem with the traditional price earnings ratio is that earnings are just too volatile from year to year," Shiller said.
"We're talking ten years out. So I'm going to go back to 100 years. The growth of real inflation directed earnings is surprisingly low. From 1890 to 1990 it was only 1.5 percent a year," he said.
"I take earnings and I extrapolate them out at 1.5 percent from where they—S&P earnings—are now and then I apply a price earnings ratio of 15, which is the historical average for 1890 to 1990," Shiller said.
The S&P/Case-Shiller composite index, released on Tuesday, of twenty metropolitan areas showed a decline of 1.0 percent in October from September on a seasonally adjusted basis.
This was a steeper drop than the 0.6 percent fall expected by economists, causing concern of a double-dip.
"It's too early to call a double-dip, but it's not too early to worry about it because we're seeing price falls," Shiller said.
"All twenty of our cities that we reported are all down over 1 percent on average. So that's like over a 12 percent annual decline," he said.
"The problem is, that partly might be seasonal, and seasonal is hard to predict," Shiller said. "It's just early to call it now."
Watch CNBC's "The Strategy Session" weekdays at Noon ET.