The one big thing economist Robert Shiller says is preventing a 1929-like stock market crash

by Dramelin 9:30 AM 0 comments

It`s a comparison no one wants to hear — that this stock market bears striking similarities to that of 1929.
The observation is coming from Nobel Prize-winning economist Robert Shiller, who`s been arguing valuations are extremely expensive.
But instead of predicting an epic stock market crash, he`s finding reasons to be optimistic.
"The market is about as highly priced as it was in 1929," said Shiller on Tuesday`s "Trading Nation.
" "In 1929 from the peak to the bottom, it was 80 percent down.
And the market really wasn`t much higher than it is now in terms of my CAPE [cyclically adjusted price-to-earnings] ratio.
So, you give pause when you notice that.
" In his first interview since penning an op-ed on Sept.
15 in The New York Times, the Yale University economics professor reiterated to CNBC that there`s one vital characteristic protecting investors from losing their nest eggs: Market psychology.
"It`s not just a matter of low interest rates, it`s something about the American atmosphere.
It`s partly the Trump atmosphere.
Investors love this.
I can`t exactly explain – maybe it has something to do with prospective tax cuts.
But I don`t think it`s just that.
It`s something deeper, and it`s pushing the American market up," he added.
Unlike 1929, Shiller points out there`s not much talk about people borrowing exorbitant amounts of money to buy stocks.
Plus, he notes there`s now more regulation.
But don`t mistake the Yale University economics professor for a bull.
"I don`t want to encourage people too much to put a lot into the most expensive market in the world," said Shiller.
has the highest CAPE ratio of 26 countries.
We are number one.
" Shiller`s latest thoughts came as stocks extended a record win streak.
The Dow hit both an all-time intraday high and close.
It`s now up 22 percent since Donald Trump won last November`s presidential election.
The S&P 500 and Nasdaq both closed at fresh record highs on Tuesday, too.
Shiller may see red flags, but he isn`t ruling out a market that continues to churn out fresh records for months, if not years.
"I wouldn`t call it healthy, I`d call it obese.
But you know, some of these obese people live to be 100 years, so you never know," said Shiller.