Investors 10/25/2019
When Nobel Laureate
and "Irrational Exuberance" author Robert Shiller says he sees bubbles
in the financial markets — you'd better listen up. He literally wrote
the book on stock market crashes and bubbles after all.
"I see bubbles everywhere," Shiller, economics professor at Yale University and author of just-published "Narrative Economics"
told investors gathered in Los Angeles on Oct. 23. "There's no place to
go. You just have to ride it out. You invest even though you expect the
price to decline." Shiller famously predicted the 2000 stock market
crash and the 2007 crash of the housing market.
The timing of Shiller's ominous warning comes at a scary time. This is the month of the 90th anniversary of Black Monday.
That day on Oct. 28, 1929, the Dow Jones Industrial Average fell 13%.
That still stands as the second-worst drop in history and, combined with
the pounding the stock market took in early days of the depression,
took 25 years for investors to recover from.
Shiller sees bubbles in the stock market,
bond market and the housing market. "You get ... in a situation where
you know it's going to decline, but you still saved enough to hold you
over; you have no choice."
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