Nobel laureate economist Robert Shiller of Yale University has warned in recent months of the possibility of bubbles in stocks, bonds and real estate.
So it will likely come as no surprise to you that he warns against expecting strong investment returns in the future.
"Don't use your usual assumptions about returns going forward,"
Shiller told CNBC. Stocks have historically returned about 9 percent a year, bonds about 5 percent and homes about 6 percent.
As for stocks, Shiller's cyclically adjusted price-earnings ratio, which accounts for 10 years of earnings, is at a historical high. "It's very hard to predict turning points in markets, but it's definitely high," he said.
As for bond yields, they "can't keep trending down" and "could [reach] a major turning point in coming years," Shiller said.
So what's the solution? "You might want to save more," he said. "A lot of people aren't saving enough."
Also, invest globally. "Diversify, because that helps reduce risk, and you can diversify outside the United States. Some people would never invest in Europe. I think that's a mistake."
Not everyone is worried about U.S. stocks, despite a bull market that has lasted almost six years.
A Legg Mason survey of 458 investors with investable assets of at least $200,000 found that 85 percent believe U.S. equities "offer the best opportunities over the next 12 months" among all global asset classes. That's up from 74 percent a year ago.
The top three issues that investors worry could “derail the progress” of their investments in 2015 are: global economic instability, economic instability in the U.S. and increasing market volatility. Only 11 percent are concerned about inflation, and just 5 percent are concerned about rising interest rates/yields.
Investors see China and Japan as the countries representing the best non-U.S. market investment opportunities during the next 12 months.
"Investors are looking for the U.S. equity market’s strong run to continue," Matthew Schiffman, head of marketing for Legg Mason, said in a statement. The S&P 500 has tripled since March 2009.
But all this enthusiasm may be a dangerous thing. It's "concerning," Schiffman said.
"Overconfidence can lead to a degree of complacency that could prevent investors from paying close attention to their overall financial plan and how they have allocated their assets as their own needs change," he explained.
"Investors have not changed their asset allocation since we started measuring investor sentiment three years ago, which could be another sign of complacency creep."
© 2025 Newsmax Finance. All rights reserved.