It’s been years since investors have been this fearful of a stock market crash, Nobel-winning economist warns
That’s Robert Shiller, a Nobel Prize-winning economist and Yale professor, urging a cautious approach to investing in the top-heavy stock market in an op-ed for the New York Times.
Consider a separate measure of stock valuations that I helped create — the Cyclically Adjusted Price Earnings (C.A.P.E.) ratio. This is a measure that enables the comparison of stock market valuations from different eras by averaging the earnings over 10 years, thus reducing some of the short-term fluctuations of each market cycle.
It now stands at a level that was higher in only two periods, both of which were followed by stock market crashes: the 1920s, in the lead-up to the Great Depression; and early 2000, just before the bursting of the dot-com bubble.
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