Robert Shiller compares housing, stocks and crypto to the Wild West

Nobel laureate Robert Schiller is worried that a bubble is forming in some of the hottest sectors on the market.

He is particularly concerned about housing, stocks and cryptocurrencies, where he sees a “wild west” mentality among investors.

“I did not write it in a book or publish it. I said that, “the Yale University professor told CNBC on Friday.

Although the record for stocks and cryptocurrencies is taking a break in the last few weeks, Schiller is worried. He is particularly worried about the recent housing boom.

“In real terms, housing prices have never been so high. My data has been coming back for more than 100 years, so that’s something, “said Schiller, co-founder of the S&P CoreLogic Case-Shiller housing price index. “I do not think all this is explained by the policy of the central bank. There is something in the sociology of markets that is happening. “

Over the past three decades, Schiller has found that house prices seem to be the engine of housing starts. He sees the pattern reappear and highlights it in a special diagram.

Housing starts is a new housing project that starts in a certain month and is considered a key economic indicator. Housing start is reported when construction begins on the foundations of a residential structure.

“We have a lot of upward momentum now. So, waiting a year is unlikely to lead to lower house prices, “Schiller said.

According to Schiller, the current action on house prices is also reminiscent of 2003, two years before the slide began. He noted that the decline was gradual and eventually collapsed around the 2008 financial crisis.

“In three or five years, I could imagine that they would be [prices] significantly lower than they are now, and maybe that’s a good thing,” he added. “Not from the point of view of a homeowner, but from the point of view of a future homeowner. This is a good thing. If we have more houses, we will be better off. “

Schiller, an expert on how our emotions drive financial decisions and author of Narrative Economics: How Stories Go Viral and Drive Major Economic Events, also sees that mass psychology plays a major role in the epic stock market recovery.

From its lowest level in March 2020, the S&P 500 and Dow are up almost 90%, while the tech Nasdaq is just over 100%.

Schiller, who sees stocks as expensive during the year, warns that fears of inflation could eventually push long-term assets down.

“The ultimate source of Crypto value is so ambiguous”
The cryptocurrency market also puts Schiller on the alert.

“It’s a very psychological market. It’s an impressive technology, “Schiller said. “But the ultimate source of value is so ambiguous that it has a lot to do with our stories, not reality.”

Even Schiller is tempted.

“I was thinking of buying them to feel the effect. A lot of people actually do that, “he said. “I have never bought bitcoin. Maybe I should be active in this market. “

 Junior Trader Mert Mustafa

Varchev Absolute Trader

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