Robert Shiller: ‘Wild West’ Mentality Is Gripping Housing, Stocks And Crypto
The comments below are an edited and abridged synopsis of an article by Stephanie Landsman
Nobel prize-winning economist Robert Shiller is worried a bubble is forming in some of the market’s hottest trades. He’s notably concerned about housing, stocks and cryptocurrencies, where he sees a Wild West mentality among investors.
Even though the record run in stocks and cryptos has been taking a break, Shiller is worried. He’s particularly uneasy about the latest housing boom.
Over the past three decades, Shiller finds home prices seem to be driving housing starts. He’s seeing the pattern emerge again, and highlights it in a special chart included here.
According to Shiller, current home price action is reminiscent of 2003, two years before the slide began. He notes the dip happened gradually and ultimately crashed around the 2008 financial crisis.
Shiller, an expert in how our emotions drive financial decisions, also sees mass psychology playing a big role in the epic stock market rebound. He viewed stocks as highly priced going into the year, and warns that inflation fears could ultimately push long-term assets lower.
The cryptocurrency market is putting Shiller on alert, too.
“That’s a very psychological market. It’s impressive technology,” Shiller said. “But the ultimate source of value is so ambiguous that it has a lot to do with our narratives rather than reality.”