Investment Robert Shiller is wary of just how long the current bull market can continue but he doesn’t have any hard evidence of a sudden ending.
“The U.S. stock market today looks a lot like it did at the peaks before most of the country’s previous 13 bear markets,” a recent study by the Yale University economics professor concluded.
“I am worried about a correction.” Shiller recently told USA Today. "But my gut is it will keep going up for a while,” said Shiller, who was awarded the Nobel Prize in Economic Sciences with Eugene Fama and Lars Peter Hansen in 2013.
“There was breathless anticipation of something bad happening,” he says of the days before past market crises. “I just don’t see it now. (But) it could change fast,” said Shiller, who also helped develop the widely-followed S&P/Case-Shiller Home Price Indices.
Investors are “impressionistic,” he says. They are in a bullish state, caught up in President Donald Trump’s narrative of success. “He is a motivational speaker for capitalism,” Shiller says. “Trump could inspire more stock increases,” he told USA Today.
However, the end of the rally could come suddenly and without any warning.
It will be a change in the investor mindset that goes viral and causes a switch from bullishness to bearishness, USA Today explained.
“Some kind of trigger, some suggestion that other investors are changing their minds,” Shiller said. “Some blowup,” he said.
Meanwhile, Shiller says he has lightened up on U.S. stocks in his personal portfolio and sees better opportunities and lower risk in foreign equity markets.
Despite not having a single major legislative victory and with prospects for a government shutdown in December looming, stocks have not looked back in the Trump era, Reuters reported.
The S&P 500 is up 21.1 percent since the 2016 election, while the Dow has gained 28.5 percent in that period and the Nasdaq Composite is up 30.3 percent.
Banks and technology have been the best performers over the past year, with telecommunication services the weakest performer.
The Dow has closed at a record high more than 70 times since election day 2016 and the S&P 500 has closed at a record on 52 days in 2017 -- the fifth-most in any year, but it could challenge the 59 record closes in 1928 for third place or the 62 in 1964 for second, according to S&P Dow Jones Indices data.
The year with the most S&P record closing highs is 1995 with 77. There were 53 in 2014.
Economic growth across the globe, alongside stimulative monetary policy from the world's largest central banks, have been behind the market's rally.
The expectation of pro-growth and business-friendly policies from the Trump administration as well as bets on deregulation, gave investors further reasons to invest in stocks.
For his part, Trump recently sent tweets pointing to the "great confidence" in his administration’s efforts, noting the record level the stock market hit on Monday.
He added that the administration is at work on cutting taxes.
(Newsmax wire services contributed to this report).
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