It looks like the powerful stock rally has infected Robert Shiller, the famously negative Yale professor.
In an interview with Bloomberg, Shiller said there are still plenty of risks to the economy, but that it’s important to be invested
Investors should brave the risk of “economic chaos” and buy stocks and real estate, said Yale University professor Robert Shiller, whose 2000 book “Irrational Exuberance” predicted the market’s collapse.
“I’m less pessimistic than I was a few months ago,” Shiller said of U.S. equities in an interview in New York. “The price-earnings ratio is about average, and by that you might say it sounds like one should be in the market and have a balanced portfolio that has a good share of stocks.”
“Having a good fraction of your portfolio in stocks, not zero, is probably sensible now,” he said. “People should be in real estate as well because that has a chance of rebounding. It has to be about diversification, about spreading risks.”
Not surprisingly, he’s doing some serious hedging, as he added the unemployment is still likely to rise substantially and that both home prices and the S&P 500 could be headed much lower.
Hope that helps.