I have always held both Nobel Prize Winner & Yale Professor Robert Shiller and Wharton Professor Jeremy Siegel in high regard on their macro views on the US Economy and have quoted them often over the years
Their latest take on whether US Equities are overvalued pits these friends against each other.
S & P 500 is at 2100 levels and the Dow is at 18000
Shiller is concerned based on the low Valuation Confidence Index Measure on his Survey of Individual & Institutional Investors on whether they think US Equities are overvalued.The Index is at levels never seen since 2000.This low Conficence in the Market Valuation is symtomatic of a Bubble but there is no data to support this yet.It is prudent to save and diversify
Siegel on the other hand remains bullish over the medium term and says that such high equity valuations are justified in an era of low interest rates and they are nowhere near Bubble territory
However they both agree that Bonds are overvalued though stop short of calling them in Bubble Mode
Interestingly here are some other prominent doomsayers
Dr ‘Doom’ Nouriel Roubini just stated “Market illiquidity will eventually trigger a bust and collapse”
Here’s what another Jeremy but a hugely bearish one ~ Jeremy Grantham of GMO proclaimed last year
Grantham of GMO say the next Bust will be Nothing Like You Have Seen Before !
Wednesday, March 26th, 2014
Interestingly Grantham opined in March 2014 as above that the S & P 500 may yet go higher to @ 2350 levels as the crash has historically come at an average of @ two standard deviations from the mean…..we are 10% away from this level yet
For those interested in assessing the consistency in views here are my past blogpost links to Robert Shiller
Yale Students play a prank on Nobel Laureate Robert Shiller during his Class on Macroeconomics
Just viewed Bogle v/s Seigel…Index Investing v/s Stocks
Saturday, February 21st, 2009
How will all this effect Indian Equities ?
After our Sensex hit a record 30000 intraday on March 4,2015 I had offered this extensive viewpoint to clients and even reiterated on ET Now on March 31,2015 that markets were running ahead of fundamentals…..a comprehensive viewpoint was posted on SCRIP STANDPOINT on my company website where I’ve said that the Sensex will slip into the lower Trading Range of 25000 to 27000 from 27000 to 29000 in the short term