Author Topic: Nobel Prize economist warns of U.S. stock market bubble  (Read 415 times)

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Offline Cincinnatus

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Nobel Prize economist warns of U.S. stock market bubble
« on: December 01, 2013, 03:37:19 PM »
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BERLIN (Reuters) - An American who won this year's Nobel Prize for economics believes sharp rises in equity and property prices could lead to a dangerous financial bubble and may end badly, he told a German magazine.

Robert Shiller, who won the esteemed award with two other Americans for research into market prices and asset bubbles, pinpointed the U.S. stock market and Brazilian property market as areas of concern.

"I am not yet sounding the alarm. But in many countries stock exchanges are at a high level and prices have risen sharply in some property markets," Shiller told Sunday's Der Spiegel magazine. "That could end badly," he said.

"I am most worried about the boom in the U.S. stock market. Also because our economy is still weak and vulnerable," he said, describing the financial and technology sectors as overvalued.

He had also looked at "drastically" higher house prices in Rio de Janeiro and Sao Paulo in Brazil in the last five years.

"There, I felt a bit like in the United States of 2004," he said, adding he was hearing arguments about investment opportunities and a growing middle class that he had heard in the United States around the year 2000.

The collapse of the U.S. housing market helped trigger the 2008-2009 global financial crisis.

"Bubbles look like this. And the world is still very vulnerable to a bubble," he said.


http://ca.news.yahoo.com/nobel-prize-economist-warns-u-stock-market-bubble-145958281--sector.html

The only real bright spot in the Obama economy has been the stock market but it's growth has been caused by Fed policy, not by any economic fundamentals. Nonetheless the daily reports of the Dow reached such and such today has led to a complacent public despite the truly awful employment numbers under Obama. This bubble is going to burst, but when is the question.
We shall never be abandoned by Heaven while we act worthy of its aid ~~ Samuel Adams

Offline Chieftain

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Re: Nobel Prize economist warns of U.S. stock market bubble
« Reply #1 on: December 01, 2013, 03:46:17 PM »
The Stock Market has become so highly automated that computers act and react to trades far more quickly than any small investor can possibly keep up or compete with.  Most of the trading around the world these days is all automated and the trades take place in milliseconds...


Offline Oceander

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Re: Nobel Prize economist warns of U.S. stock market bubble
« Reply #2 on: December 05, 2013, 09:02:00 PM »
The Stock Market has become so highly automated that computers act and react to trades far more quickly than any small investor can possibly keep up or compete with.  Most of the trading around the world these days is all automated and the trades take place in milliseconds...



Which suggests that individual investors should be investing for longer time-horizons and should not be trying to time the market through day trading.

Offline Oceander

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Re: Nobel Prize economist warns of U.S. stock market bubble
« Reply #3 on: December 05, 2013, 09:03:44 PM »
http://ca.news.yahoo.com/nobel-prize-economist-warns-u-stock-market-bubble-145958281--sector.html

The only real bright spot in the Obama economy has been the stock market but it's growth has been caused by Fed policy, not by any economic fundamentals. Nonetheless the daily reports of the Dow reached such and such today has led to a complacent public despite the truly awful employment numbers under Obama. This bubble is going to burst, but when is the question.


Of course.  That is most likely the main reason why the Obama Fed has kept the "free" money spigot open so wide for so long.  They're gambling, of course, on the hope that the bubble won't burst until after 2016.

Offline Atomic Cow

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Re: Nobel Prize economist warns of U.S. stock market bubble
« Reply #4 on: December 05, 2013, 09:04:04 PM »
I don't need a Nobel Prize realize the stock market has become a giant bubble thanks to QE to Infinity.
"...And these atomic bombs which science burst upon the world that night were strange, even to the men who used them."  H. G. Wells, The World Set Free, 1914

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Online Bigun

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Re: Nobel Prize economist warns of U.S. stock market bubble
« Reply #5 on: December 05, 2013, 09:32:46 PM »
Watch what happens when the fed turns the spigot off!

Which they inevitably will have to do eventually!
“It is difficult to free fools from the chains they revere.” —Voltaire


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