Brick Wall or 'Wall of Worry'? Pundits Ponder Stocks' Outlook

With the market perched at record highs, even the experts don't seem to have a clue where stocks are headed next.

In back-to-back appearances on CNBC, two high-profile economists, Yale's Robert Shiller and Penn's Jeremy Siegel,  showed their clashing colors when it comes to equities.

"We've got stocks and bonds highly priced, and now we're starting to see housing maybe going in the same direction," Shiller, a Nobel laureate and economics professor at Yale, told CNBC. "It's like everything, everything is pricey."

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Shiller suggested investor anxiety might be the reason financial assets have moved higher: When investors need to be reassured of their financial security, they bid things up in value.

But Siegel, a professor of finance at the University of Pennsylvania’s Wharton School, expressed the opinion that stocks have room to run higher and will probably do so.

A best-selling author who is noted for his optimistic prognostications on stocks, Siegel told CNBC the bull market is still running, and the Dow could hit 18,000 by the end of the year. The blue-chip average closed Friday at 17001.22.

"We live in a world of uncertainty, and bull markets actually climb the wall of worry," Siegel said. "When we see nothing in the future that can worry us at all, I'll get worried and I'll probably tell people to sell stocks."

In a guest column for MarketWatch, Mitch Tuchman, co-founder, of MarketRiders, an online investment service for ETFs, said that taking pundits’ opinions as gospel is like tossing a coin.

“If you're a trader, and the market is full of them, you could take both of these points of view, shake them up in a bag and pull out whichever one you like. Behavioral scientists call this ‘confirmation bias.’ Once a well-known figure supports your idea, that's all the evidence you need,” Tuchman wrote.

“If you have decided instead to be an investor, then the guesses of experts, however lionized they might be in the press, are still just guesses. Well-informed and well-meaning predictions sometimes will be right and sometimes will be dangerously wrong.”

At the Federal Reserve’s monetary policy confab in Jackson Hole, Wyo., where many of the world’s top economic pundits are gathered, Princeton University economist Alan Blinder told NPR there is no consensus among participants whether the high-flying U.S. stock market is in a bubble.

“Well, you know, a lot of people are asking that question, and the truth is nobody knows," Blinder said. "I mean, some of this is surely due to the super low interest rates which can't last forever, although they will I believe last for a little while longer, and part of it is definitely due to the performance of U.S. companies.”

“As we all know, profits are way up, and stock markets are supposed be discounting profits. So it's not very surprising that it's high right now.”

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