The Future is Unpredictable, Diversify!

with Robert J. Shiller, Sterling Professor of Economics at Yale University, Nobel Prize winner, Developer of the Case-Shiller Home Price Index, Prolific Author on Financial Topics Shiller shares his views on a broad range of topics. On real estate, where Shiller is quite the expert, he believes markets have tempered their double-digit price gain expectations to near 4% annual growth, supported by low mortgage interest rates and moves to encourage first-time home buyers. On long-term interest rates which are at all-time lows and cannot go lower, Shiller isn’t quite sure when rates will rise but he knows it’s inevitable. He also puzzles over the perpetual long-term rise in equities, what he calls the Equity Puzzle – he thinks stocks could continue to rise but he’s not sure why. He also sees stock markets on the high side, going by his CAPE ratio, and his mantra for such times is “diversify”. His main takeaway – no one knows what the future holds so it’s best to not spend too much time predicting it.