17 Burst results for "Robert Schiller"

"robert shiller" Discussed on NewsRadio WIOD

NewsRadio WIOD

01:51 min | 1 year ago

"robert shiller" Discussed on NewsRadio WIOD

"New York Times Business Day TITLE Wall Street investment strategies have deepened volatility what street experts warn that risky bond funds and risky exchange traded funds, or E T F have become so large that the end result has been a riskier, more volatile market. Wave of a nester selling. We'll start a wider market route as managers struggle to unload junk bonds and junk bond mutual fund Next ARTICLE. New York Times This is section title hence of the next global recession, no laureate. Robert Shiller and the International Monetary Fund have reported that the world economies are headed towards a global financial crisis. Folks get out of risky investments. Get out of the Wall Street casino your money safe insured. You call 888755 88 87 Get the appointment with Anthony Perry get all the details, read all the flying print. Find out about that 678% per year for the purpose of generating future lifetime income. Get all the details on that first year bonus of up to 15 to 20%. Call now. 888755 88 87 time now, Anthony to pay folks back. I mentioned the beginning of the show. We would reimburse listeners for their investment of time and you have made it to the payoff. This is the lightning round. We're going to throw out various investment strategies at Anthony. But if the investment you're looking for he is truly safe and insured. Well, then your options. Are only two only two options, folks. The first option to ensure your investment is a certificate of deposit at the bank. Not that good. Not that liquid. You gotta keep your money there for five years. Not too good. Then they superior 60 annuity. That's the second option. Superior 60 nudity is insured and the superior 60 nudity is earning you 67 or 8% per year for the purpose of generating future lifetime income. The superior 60 knew he comes with a bonus of anywhere between 15 to 20%. That's correct. You have access to your funds immediately. If you want to take those funds take lifetime income. Take your required minimum distribution immediately. The 15 duty Very conventional, like any.

Anthony Perry New York Times International Monetary Fund Robert Shiller
"robert shiller" Discussed on Newsradio 700 WLW

Newsradio 700 WLW

03:09 min | 1 year ago

"robert shiller" Discussed on Newsradio 700 WLW

"12 news radio 700 wlw. Great having you with us on this glorious day so nobody can predict the future way could we know who's going to be elected president here? The next week or so. But one of the things that a lot of people a warning about is maybe a stock market crash. No one knows the future. But given the general lack of investor confidence and mend amid this pandemic and political polarization, there is a chance. That a negative and self fulfilling prophecy will flourish. This highlights the importance of being a well diversified and assets classes. Including Treasury securities that are safe and not over exposed to US equities right now, anyway, That's Robert Shiller. He's a Nobel Prize winning economics. Economics professor at Yale, and he's urging caution. To investing in the top heavy stock market is in the New York Times a couple of days ago. Their conflicting reports as to exactly Whether or not AH Biden election will be as devastating to the market as some would think. As a matter of fact, there are some on the street that think of Biden is elected that it will benefit Wall Street. Now, Of course, it's all fun and games until the election actually starts. The market has done well under Trump. It was about ready to kiss 29,000. When the pandemic it and it got very close to 29,000 again. In the last month. Now, of course it's it's struggling just under 27,000, or just over 27,000 and looking to make some sort of climate some game. But that thing that's holding it back. Obviously, are two things, one the uncertainty of the election and where it's going and to this is the more important thing. Is the Corona virus package. It's not existence and it will not happen between now and the election, so the election is coming on Tuesday of next week, one week from today. And if there is no stimulus package by then, and it won't happen, everybody has gone home to campaign. Well, then that really throws things into a tizzy on the street. And there will be a reaction, regardless of who wins on Tuesday, Remember after Trump one in 2016? There was a giant cell off and people predicted Armageddon, but it was quickly rectified and back on its feet and even survived a very quick Brexit scare. So I guess the whole bottom line on this and I guess what? What's the point of the article here? By Robert Shiller Wass is that regardless of how things steer through the economy, regardless of who wins elections, there will always be buying and selling. Don't put your eggs all in one basket. Well, the market really tank. If indeed Joe Biden is elected, we'll find out on Tuesday. A lot of the people on the street think no. In fact, a lot of people on the street think It may be pretty damn good 8 15. Let's check traffic..

Robert Shiller Joe Biden US president Trump Yale New York Times professor
"robert shiller" Discussed on Invested: The Rule #1 Podcast

Invested: The Rule #1 Podcast

04:23 min | 2 years ago

"robert shiller" Discussed on Invested: The Rule #1 Podcast

"I want you to buy companies with stock priced at two dollars a share. When it's only worth a dollar by all the companies you can? I don't with stock price at fifty six dollar. Don't be spending it at fifty cents. So Oh and and the bad allocators do that all the time and so they instead of using our money then they'll go borrow money but you know uh-huh and that sounds okay except that especially when you're paying three percent interest except you guys when they borrow money at a corporate level they don't get it like you get it on your house for thirty years. They don't get a thirty year loan. They get a three year loan which means they are at risk for refinancing that money if they can't pay it off in three years and and you know they just mostly can't and dollar tree buys family dollar in a bidding war with dollar general and dollar tree wins the bidding war pain rain for more than it should have for. Family dollar borrows the money and it's it's trying to bury them now years later it's they're still L. struggling under the debt load. That's burying them. You're saying oh the deaths horrible and it's so hard for them to get out from under it and they've got all these stores that they paid too much for aren't doing well right so you've got to have people running. The business are really good at allocating capital. And then you see them spending money mergers acquisitions borrowing money increasing the debt. Buy Back stock at a high price. Those are bad allocators and we want to stay away from those guys especially in this kind of a market. We did a really fun interview with Jacob Taylor all about capital allocation and I would suggest going back to listen to that one and he wrote a great book that Charlie Monger himself recommended and So look up. Jacob Taylor's book on Amazon and check out our interview with him. I think that Kinda gives us today all right so we got at the Schiller. Pe and the Wilshire GDP ratio which are two methodologies. That we've talked about before but to point them out again and I think is really cool. I'm really glad that you brought them up again. It's a good way to start the year kind of know where we're at. Yeah give some context have have a little tether to what's gone before and then it allows me and this is ultimately personal right investing is very personal process and it allows me to feel more comfortable like okay. Maybe you know. Maybe I'm just not beating the bushes hard enough. Maybe I should be working harder. Maybe I I should be studying more. Maybe she'd be reading more. That's probably always true. Well that's true of course but then you just find you know that there's a frustration and you start to realize. Oh yeah okay well. The market is massively priced historically above its values historically and that gives me some comfort that I probably should be having trouble right now. Finding good stuff. Okay I got that now. Then what's three. What's what's the result of that is to remind myself to be patient Continue building the watch list. Like you said You'd find this wonderful company. It's frustrating because you can't buy it well there's another side of that coin and that is wow. I got another one. That's four my list that I can buy down the road another gym here. That's going to go on sale. And Yeah that makes me feel good when I can put one up there. I agree love adding to the wish list. All right thanks seventy guys. Thanks for listening to invested. If you enjoyed this episode you want more information including show notes outs. And more episodes visit us at invested. PODCASTS DOT COM. There's a special offer waiting for podcast listeners to attend my three day investing workshop absolutely free so just head to invested podcasts dot com everything discussed on his podcast. Either my opinion or Danielle's opinion and is not to be taken as investing advice. Because I am not your investment advisor nor have I considered your personal situation as has your fight do -ciary this past is for your entertainment and education only and I hope you enjoy it..

Jacob Taylor advisor Charlie Monger Schiller Danielle Amazon
"robert shiller" Discussed on Invested: The Rule #1 Podcast

Invested: The Rule #1 Podcast

07:51 min | 2 years ago

"robert shiller" Discussed on Invested: The Rule #1 Podcast

"Finding a bottom because the companies stepping in and buying it and making the price go up it can and and so that puts an artificial price on it. Ah they've got a lot of extra money and do they have a lot of extra money. Yes new and do they WANNA take a risk and by a different company at these high high prices or you know. Open a new branch when nobody's quite sure what's happening while they might want to do that. Because of interest rates but yeah. They're they're not. They're not taking a lot of risks with all their extra money risk and so it religiously and right now when we look at companies that are taking risks what we would expect expect to see. Is that capital expenditures. Go up that they're investing not just in stuff for how this year's going to go But in long-term investment they're putting railroad tracks or put it in airports. They're they're putting in warehouses and they're buying equipment. That's going to last this them several years. Those are capital expenditures. And we don't see that it's one of the real conundrums for president trump. Is that that the idea of cutting taxes for American businesses was to help them be more competitive to their bottom line but with the expectation that they would invest the money in more jobs by building warehouses and more capital expenditures. And they just haven't done that it said they bought back their own stock which is an artificial boost to the per share. Stock Price does nothing for the value of the company whatsoever. Yeah it's frustrating and it's happening so much that there are if you you want to take a minute and just google stock buybacks. There are some really interesting articles that have been written about how this works. And it's a fun like our of your life just read about the stock buybacks and how many companies are using them to help their stock price and to just just use some of this extra money what it's doing to the market and it's one of the ways we actually look to see if management is a good allocate or. I'm just thinking out allowed here. I really need to get that. That into the tool set the allocation of capital needs to be a judgment call. We look look at companies in our tool set of having good management if they're keeping their debt very very low two zero and if their return on equity return on invested capital sustain high and moving up then. We were like the way they're allocating capital but there's another allocation of capital very valuable and that is to look to see life if they're doing stock buybacks at a reasonable price totally so if they're if they're companies massively overpriced and they don't know that that's a a bad sign for allocation of capital if they're companies massive we overprice. They do know it in. They're buying back stock. That's a terrible allocation of capital. Because they're spending my dollar and they're buying fifty cents worth value for it. Yeah and that idea. And they're taking my money as a shareholder and using it in a way that's not optimal it's just. It's wasting the money that we have that they could be giving to me the and dividend which I would much prefer. You've talked a lot. We've talked a lot about how companies can use this extra cash. They can invested in Capital expenditures they can invested in buying other companies Through Manet they can give it as dividends to the shareholders and they can use it as has to buy back their own shares. And those. We've talked a lot about how those things are all kind of in theory equal. It's just a matter of toys on the on the part of the management And actually I think you've said a bunch like you would prefer that they not do the dividend option if the other options can be used well but prefer they grow it for me. Yeah but they have to use it well and instead what these guys are doing with five acts the stock prices so high is just wasting it and it's incredibly frustrating to see because it's giving buybacks a bad name to the point where now there's like politicians talking about legislation about it. Warren is out there with the platform that out to stop these foreign. I thought you meant Warren Buffet and you know to stop these sort of heinous buybacks and while I don't cheer on her method of doing it from the top down because there's all these unintended costs. Yeah Cheer on the Com motion about the content is like like. Yeah these morons I mean. IBM has been buying back. Its stock for the last ten years and you can may really make a good good case that they have been just wasting shareholder money. They might as well take those billions out in the parking lot and burn them all good in with his billions and billions liens and billions and billions of dollars. They spent on stock buybacks at one hundred eighty I share and hundred and sixty eight hundred fifty share and their stock one hundred and thirty. It's just for years so this is I mean go go read about. IBM's by and you'll see what I mean and just add up the billions billions and that money's Gone Gio any gone if this company doesn't get its act together so all it's done is support. The stock option prices prices for share for the management team. And that's just a heinous use of the money so the and then of course the the second way these guys prop everything up up is to borrow money and buy other companies so this is just one of the other ways you can do it you by another company and your company revenue goes up and you start to look like you're a bigger company and then the stock ideally goes up with that right so you get you get management teams that are bad alligators of capital making very bad judgments when it comes to acquiring other companies and again not to beat up on IBM too much but they've done a lot of buying a lot oughta stuff and it hasn't improved their position in the market while Microsoft came out of nowhere get handed. IBM It's hockey event. A success success story. That's been amazing to watch. I did not predict that. I don't know I don't know who did somebody started. But it wasn't wasn't anybody I know it wasn't the guys running Microsoft. They didn't know that was going to be this thing. Nobody knew somebody. He was going for sure. What's his name Such as something is the CEO. And I can't remember his name either right now but fabulous job Bob guys done is. IBM with more resources. By far and nothing is just struggling along with a very small percentage into that market so mergers and acquisitions I mean you can see companies do it man. But y'all stores the point that they borrow to purchase companies borrowed a purchase which is a threat then Tiki your money and purchasing companies which is different than purchasing companies using your stock. Those are three different ways. Three different ways and again you wanna see that the guys who are running their that women are running. The company are allocating capital sensibly. So if they're using their own stock to buy companies you really want him to be using stock. That's way.

IBM Microsoft Warren Buffet google president Manet CEO Bob hockey
"robert shiller" Discussed on Invested: The Rule #1 Podcast

Invested: The Rule #1 Podcast

07:51 min | 2 years ago

"robert shiller" Discussed on Invested: The Rule #1 Podcast

"Finding a bottom because the companies stepping in and buying it and making the price go up it can and and so that puts an artificial price on it. Ah they've got a lot of extra money and do they have a lot of extra money. Yes new and do they WANNA take a risk and by a different company at these high high prices or you know. Open a new branch when nobody's quite sure what's happening while they might want to do that. Because of interest rates but yeah. They're they're not. They're not taking a lot of risks with all their extra money risk and so it religiously and right now when we look at companies that are taking risks what we would expect expect to see. Is that capital expenditures. Go up that they're investing not just in stuff for how this year's going to go But in long-term investment they're putting railroad tracks or put it in airports. They're they're putting in warehouses and they're buying equipment. That's going to last this them several years. Those are capital expenditures. And we don't see that it's one of the real conundrums for president trump. Is that that the idea of cutting taxes for American businesses was to help them be more competitive to their bottom line but with the expectation that they would invest the money in more jobs by building warehouses and more capital expenditures. And they just haven't done that it said they bought back their own stock which is an artificial boost to the per share. Stock Price does nothing for the value of the company whatsoever. Yeah it's frustrating and it's happening so much that there are if you you want to take a minute and just google stock buybacks. There are some really interesting articles that have been written about how this works. And it's a fun like our of your life just read about the stock buybacks and how many companies are using them to help their stock price and to just just use some of this extra money what it's doing to the market and it's one of the ways we actually look to see if management is a good allocate or. I'm just thinking out allowed here. I really need to get that. That into the tool set the allocation of capital needs to be a judgment call. We look look at companies in our tool set of having good management if they're keeping their debt very very low two zero and if their return on equity return on invested capital sustain high and moving up then. We were like the way they're allocating capital but there's another allocation of capital very valuable and that is to look to see life if they're doing stock buybacks at a reasonable price totally so if they're if they're companies massively overpriced and they don't know that that's a a bad sign for allocation of capital if they're companies massive we overprice. They do know it in. They're buying back stock. That's a terrible allocation of capital. Because they're spending my dollar and they're buying fifty cents worth value for it. Yeah and that idea. And they're taking my money as a shareholder and using it in a way that's not optimal it's just. It's wasting the money that we have that they could be giving to me the and dividend which I would much prefer. You've talked a lot. We've talked a lot about how companies can use this extra cash. They can invested in Capital expenditures they can invested in buying other companies Through Manet they can give it as dividends to the shareholders and they can use it as has to buy back their own shares. And those. We've talked a lot about how those things are all kind of in theory equal. It's just a matter of toys on the on the part of the management And actually I think you've said a bunch like you would prefer that they not do the dividend option if the other options can be used well but prefer they grow it for me. Yeah but they have to use it well and instead what these guys are doing with five acts the stock prices so high is just wasting it and it's incredibly frustrating to see because it's giving buybacks a bad name to the point where now there's like politicians talking about legislation about it. Warren is out there with the platform that out to stop these foreign. I thought you meant Warren Buffet and you know to stop these sort of heinous buybacks and while I don't cheer on her method of doing it from the top down because there's all these unintended costs. Yeah Cheer on the Com motion about the content is like like. Yeah these morons I mean. IBM has been buying back. Its stock for the last ten years and you can may really make a good good case that they have been just wasting shareholder money. They might as well take those billions out in the parking lot and burn them all good in with his billions and billions liens and billions and billions of dollars. They spent on stock buybacks at one hundred eighty I share and hundred and sixty eight hundred fifty share and their stock one hundred and thirty. It's just for years so this is I mean go go read about. IBM's by and you'll see what I mean and just add up the billions billions and that money's Gone Gio any gone if this company doesn't get its act together so all it's done is support. The stock option prices prices for share for the management team. And that's just a heinous use of the money so the and then of course the the second way these guys prop everything up up is to borrow money and buy other companies so this is just one of the other ways you can do it you by another company and your company revenue goes up and you start to look like you're a bigger company and then the stock ideally goes up with that right so you get you get management teams that are bad alligators of capital making very bad judgments when it comes to acquiring other companies and again not to beat up on IBM too much but they've done a lot of buying a lot oughta stuff and it hasn't improved their position in the market while Microsoft came out of nowhere get handed. IBM It's hockey event. A success success story. That's been amazing to watch. I did not predict that. I don't know I don't know who did somebody started. But it wasn't wasn't anybody I know it wasn't the guys running Microsoft. They didn't know that was going to be this thing. Nobody knew somebody. He was going for sure. What's his name Such as something is the CEO. And I can't remember his name either right now but fabulous job Bob guys done is. IBM with more resources. By far and nothing is just struggling along with a very small percentage into that market so mergers and acquisitions I mean you can see companies do it man. But y'all stores the point that they borrow to purchase companies borrowed a purchase which is a threat then Tiki your money and purchasing companies which is different than purchasing companies using your stock. Those are three different ways. Three different ways and again you wanna see that the guys who are running their that women are running. The company are allocating capital sensibly. So if they're using their own stock to buy companies you really want him to be using stock. That's way.

IBM Microsoft Warren Buffet google president Manet CEO Bob hockey
"robert shiller" Discussed on Invested: The Rule #1 Podcast

Invested: The Rule #1 Podcast

09:39 min | 2 years ago

"robert shiller" Discussed on Invested: The Rule #1 Podcast

"Market is going to be very very low is going to approach zero for the next twenty years when it's too high long-term and when you have the market that's very cheaply priced your long term rates. Return even if you buy the whole market will be quite good. They'll be over ten percent and so this this chart that he's created is available by Googling Schiller S. H. I l. l. e. r. p. ratio. And it'll show you this chart. It goes all the way back to eighteen seventy and you can see very quickly that the average through all of the you know the last one hundred in twenty years up to the nineteen nineties has been about a fifteen sixteen. Pe ratio this is an adjusted pe ratio for inflation oughta skip cyclically adjusted pe Ratio Cape Cape ratio. So he got the Nouvelle Prize for this because he he and I am going to make this up a little bit. I haven't read the book although it's on my coffee table right now but I'll open at some point. He he came up with this method head of developing that particular. Pe Ratio Right. Yeah okay after researching every year versus the S. and P.. Five hundred in trying to understand. Say Sorry to interrupt you. P is price to earnings ratio. Just take the price of the stock divided by US earnings and you get a number but he tell me again what the Schiller ratio is with a Schiller takes into account a ten a year average. Yep and it's in other words it spreading the shorter term ups and downs in the market spreading spreading out over a number of years which softens the curve and it gives you a ultimately a better number to know. Where's the market dangerous in whereas it super good ed right and so this you can see that the market is typically averaging out around a fifteen or sixteen Schiller and? It's a really good time to buy stocks when it's at below ten fabulous because historically you've just killed it right so in other words when in nineteen in twenty one. If you've bought a bunch of stocks the Schiller was at five and you would have made a fortune in the next eight years and then if you're really smart art and he had the shoulder. Pe ratio which you didn't you didn't see that in nine hundred twenty nine Internet to quickly bring it on the Internet you would see that in nineteen twenty nine the Schiller pe ratio had gotten all the up to thirty. And you would notice that. That's a long way north of fifteen and you would have been very nervous and you would have gotten out of the market right and then you would have been able to buy back just a couple of years later again at a five. Pe ratio and you would have made another huge fortune. So the market's it gets very very up and down like this and what we've learned over one hundred and forty years. Is that when it gets up above you know twenty four twenty five. It's getting getting into dangerous territory and it's only been up there in all those years previous in one thousand nine hundred ninety eight twenty nine it got up there at thirty okay and then nine in ninety nine it got up there got clear to forty. Yeah and then again. In two two thousand eight it got all the way up to twenty eight and then collapsed and now it's thirty one so there's only only been three times in history of this ratio. Going clear. Back to eighteen. Seventy one was the great depression the second echo the collapse of two thousand the Big Tech Stock Crash and the third time is now so yeah I remember looking at the chart it could I remember looking at. I don't have it in front of me right now. I remember looking at it. And it's like the sort of zigzagging chart and then all of a sudden there's this like insane gene skyscraper from above everything else and that's ninety nine and then it's sort of zigzags a little bit for two thousand eight and nine. It's us and it's just like steadily steadily moving up to the right and by the way that one thousand nine hundred eighty nine hundred. Ninety nine skyrocket skyscraper was exactly the time when several investors who are world class superstars of this kind of investing that. We're talking about just quit it. I mean they their own investors. Were hounding them to get into this market when they were sitting in cash. Buffet is one of the he didn't and quit because he doesn't have fun. He has Berkshire hathaway and he could control it. But Oh man you know the. He didn't have any place to put the money and he was actively looking to buy back Berkshire stock during that Time Period Julian Robertson. Who has the second best track record I've ever heard of was actively bailing out of the market? He was all in cash and he finally quit his fund and I remember really clearly watching him on TV. Say and I just don't understand in this market anymore. It's nothing like I've ever seen so we're sort of back in that. Nothing like I've ever seen sort of market could be continuing to go crazy for another little while but looking at one hundred forty years of history we can see that a little while is really just a little while it may be a year or two but inevitably gravity catches up with a market. That's price like this. So that's the Schiller. Pe and some people argue that the Schiller pe isn't right anymore that things have changed and that the true facts of the Schiller. That's averaging in a lot of really high market. Pe's aren't shouldn't be counted because they were off. So I thought I'd just look up just the regular. Pe Ratio Right. Okay wait. The Schiller shouldn't be counted as a regular. PC's because it's a little off what well because the argument would be that in the last ten years. Let's let's say four or five years years ago they would say in the last ten years it's including some really high p e ratios therefore it's higher than it actually looks like the looks fire than it actually is but they can't say that anymore today. The Schiller P. is at thirty one and the actual pe ratio. The five hundred is at twenty four point two which is incredible guys. That's incredibly ably hi. It's incredibly high. There's only been the year two thousand and the year two thousand eight in excuse me and eighteen ninety five that have been that high. That's it even nine hundred twenty nine. Wasn't that high. Okay so we are are in a sky scraping crazy priced market right now and we've already talked about why right. The interest rates being extremely low not having alternatives is out there but it starts to build on itself and you start to get a bubble and just by saying you know you sort of have to be in the market. Everybody feels that way. There's nothing else you can do. Develop this market bubble mentality so we're trying not to do that. Market bubble mentality. We're trying to look at this soberly. uh-huh recognize it. It's we me and the mouse in my pocket okay. I didn't know if you meant like royal. We didn't know if you meant like We the American government or something like that. It's just we royally okay you I'm looking at this and and try I just trying to stay pretty sober about the whole thing right the night we know that this thing can't sustain because it never has but that's inductive logic gets the same logic that a chicken house when you know the farm door slams at six in the morning it gets fed every day for two straight months and then I think the door slams that you think he's going to get you know so we don't know for sure because we don't we can't read the future but we know that that historically this way of investing this way of thinking about investing of waiting patiently until the market greed goes away and market fear begins is the safest way to manage our money in the long run and I think so. That's how we do it. And I think it's pegged to actual prophets that companies make and as we talked about last time at some point these stock prices have to start reflecting the actual profits that companies make and the question. Make it a really good point There are some things that intrude in that reflection. Actually that are very important and right now. Two of them are manipulations by the companies themselves. Right so the probably the major one of those is that they're going to buy back their own stock Dr Stock Buybacks result in the stock price.

Schiller Pe Berkshire hathaway American government US Julian Robertson Buffet Berkshire
"robert shiller" Discussed on Invested: The Rule #1 Podcast

Invested: The Rule #1 Podcast

09:39 min | 2 years ago

"robert shiller" Discussed on Invested: The Rule #1 Podcast

"Market is going to be very very low is going to approach zero for the next twenty years when it's too high long-term and when you have the market that's very cheaply priced your long term rates. Return even if you buy the whole market will be quite good. They'll be over ten percent and so this this chart that he's created is available by Googling Schiller S. H. I l. l. e. r. p. ratio. And it'll show you this chart. It goes all the way back to eighteen seventy and you can see very quickly that the average through all of the you know the last one hundred in twenty years up to the nineteen nineties has been about a fifteen sixteen. Pe ratio this is an adjusted pe ratio for inflation oughta skip cyclically adjusted pe Ratio Cape Cape ratio. So he got the Nouvelle Prize for this because he he and I am going to make this up a little bit. I haven't read the book although it's on my coffee table right now but I'll open at some point. He he came up with this method head of developing that particular. Pe Ratio Right. Yeah okay after researching every year versus the S. and P.. Five hundred in trying to understand. Say Sorry to interrupt you. P is price to earnings ratio. Just take the price of the stock divided by US earnings and you get a number but he tell me again what the Schiller ratio is with a Schiller takes into account a ten a year average. Yep and it's in other words it spreading the shorter term ups and downs in the market spreading spreading out over a number of years which softens the curve and it gives you a ultimately a better number to know. Where's the market dangerous in whereas it super good ed right and so this you can see that the market is typically averaging out around a fifteen or sixteen Schiller and? It's a really good time to buy stocks when it's at below ten fabulous because historically you've just killed it right so in other words when in nineteen in twenty one. If you've bought a bunch of stocks the Schiller was at five and you would have made a fortune in the next eight years and then if you're really smart art and he had the shoulder. Pe ratio which you didn't you didn't see that in nine hundred twenty nine Internet to quickly bring it on the Internet you would see that in nineteen twenty nine the Schiller pe ratio had gotten all the up to thirty. And you would notice that. That's a long way north of fifteen and you would have been very nervous and you would have gotten out of the market right and then you would have been able to buy back just a couple of years later again at a five. Pe ratio and you would have made another huge fortune. So the market's it gets very very up and down like this and what we've learned over one hundred and forty years. Is that when it gets up above you know twenty four twenty five. It's getting getting into dangerous territory and it's only been up there in all those years previous in one thousand nine hundred ninety eight twenty nine it got up there at thirty okay and then nine in ninety nine it got up there got clear to forty. Yeah and then again. In two two thousand eight it got all the way up to twenty eight and then collapsed and now it's thirty one so there's only only been three times in history of this ratio. Going clear. Back to eighteen. Seventy one was the great depression the second echo the collapse of two thousand the Big Tech Stock Crash and the third time is now so yeah I remember looking at the chart it could I remember looking at. I don't have it in front of me right now. I remember looking at it. And it's like the sort of zigzagging chart and then all of a sudden there's this like insane gene skyscraper from above everything else and that's ninety nine and then it's sort of zigzags a little bit for two thousand eight and nine. It's us and it's just like steadily steadily moving up to the right and by the way that one thousand nine hundred eighty nine hundred. Ninety nine skyrocket skyscraper was exactly the time when several investors who are world class superstars of this kind of investing that. We're talking about just quit it. I mean they their own investors. Were hounding them to get into this market when they were sitting in cash. Buffet is one of the he didn't and quit because he doesn't have fun. He has Berkshire hathaway and he could control it. But Oh man you know the. He didn't have any place to put the money and he was actively looking to buy back Berkshire stock during that Time Period Julian Robertson. Who has the second best track record I've ever heard of was actively bailing out of the market? He was all in cash and he finally quit his fund and I remember really clearly watching him on TV. Say and I just don't understand in this market anymore. It's nothing like I've ever seen so we're sort of back in that. Nothing like I've ever seen sort of market could be continuing to go crazy for another little while but looking at one hundred forty years of history we can see that a little while is really just a little while it may be a year or two but inevitably gravity catches up with a market. That's price like this. So that's the Schiller. Pe and some people argue that the Schiller pe isn't right anymore that things have changed and that the true facts of the Schiller. That's averaging in a lot of really high market. Pe's aren't shouldn't be counted because they were off. So I thought I'd just look up just the regular. Pe Ratio Right. Okay wait. The Schiller shouldn't be counted as a regular. PC's because it's a little off what well because the argument would be that in the last ten years. Let's let's say four or five years years ago they would say in the last ten years it's including some really high p e ratios therefore it's higher than it actually looks like the looks fire than it actually is but they can't say that anymore today. The Schiller P. is at thirty one and the actual pe ratio. The five hundred is at twenty four point two which is incredible guys. That's incredibly ably hi. It's incredibly high. There's only been the year two thousand and the year two thousand eight in excuse me and eighteen ninety five that have been that high. That's it even nine hundred twenty nine. Wasn't that high. Okay so we are are in a sky scraping crazy priced market right now and we've already talked about why right. The interest rates being extremely low not having alternatives is out there but it starts to build on itself and you start to get a bubble and just by saying you know you sort of have to be in the market. Everybody feels that way. There's nothing else you can do. Develop this market bubble mentality so we're trying not to do that. Market bubble mentality. We're trying to look at this soberly. uh-huh recognize it. It's we me and the mouse in my pocket okay. I didn't know if you meant like royal. We didn't know if you meant like We the American government or something like that. It's just we royally okay you I'm looking at this and and try I just trying to stay pretty sober about the whole thing right the night we know that this thing can't sustain because it never has but that's inductive logic gets the same logic that a chicken house when you know the farm door slams at six in the morning it gets fed every day for two straight months and then I think the door slams that you think he's going to get you know so we don't know for sure because we don't we can't read the future but we know that that historically this way of investing this way of thinking about investing of waiting patiently until the market greed goes away and market fear begins is the safest way to manage our money in the long run and I think so. That's how we do it. And I think it's pegged to actual prophets that companies make and as we talked about last time at some point these stock prices have to start reflecting the actual profits that companies make and the question. Make it a really good point There are some things that intrude in that reflection. Actually that are very important and right now. Two of them are manipulations by the companies themselves. Right so the probably the major one of those is that they're going to buy back their own stock Dr Stock Buybacks result in the stock price.

Schiller Pe Berkshire hathaway American government US Julian Robertson Buffet Berkshire
"robert shiller" Discussed on Invested: The Rule #1 Podcast

Invested: The Rule #1 Podcast

04:42 min | 2 years ago

"robert shiller" Discussed on Invested: The Rule #1 Podcast

"Right. Somebody's going to be the pets.com. That's DOT com of this market and other ones are going to be the coke and be really well priced at the end of the day and are going to last for the next twenty years or the longer so you can see that happening to your point in a market that's dropping whereas in this market companies aren't being tested at all. They're getting getting easy money all the time. So right okay. You've done a great job of making my point. So that's what I'm here for. You see clear and then express it very well and so that's why we when when we're in a market that's it's really up there and everything is going good and people are buying anything for more than they should pay when they're selling it And they're not stupid. We just gotTa make sure that we know why. So you know the right now. Boeing for example is is a company. That's under a lot of pressure from a problem that they've got and they're trying to work their way through it they just fired their CEO. You know that's that's a big deal. It's a big deal. And I look at Boeing. I go man I would jump all over this at two hundred and fifty to eighty share. It's IT's selling for three thirty down from four fifty okay. So it's dropped a lot but hasn't dropped so much that is so good deal. I could just this jump all over it. I'm getting a ten count price. Just isn't there right. Because that's what Sony people look at. Its dropped forty percent or whatever that adds up it's dropped eighty percent from its high like that's what people say and seemed to care about and that doesn't actually mean anything on the is relative to what it was it's lower but when you see that just think you know the price of gold necklaces at a beachfront gold store. Eighty percent of we buy gold. Jeez yeah then. That's price just doesn't price just doesn't mean anything. It means what somebody somebody paid. That's all it doesn't mean value. It doesn't mean what it's worth it doesn't have a damn thing to do with it except in the long run eventually eventually the markets will price things where they should be. And that's what we trust will happen. And that's why we don't want to buy things that are expensive because the market's going to eventually price them where they should should be and even if they're gone they've gone up in ten years. which good company might you know if you buy it and pay too much you still gonNA come out okay? You're just not going to have a great great rate of return. You're just not going to get rich and what we WANNA do. Is We want to do an investment style that gives us financial freedom. We want to have enough money coming out of this thing with high rates of return and the ability to do that consistently that we don't have to worry about what's our job right where we WANNA go. Yeah so be careful. In this market because things companies tend to have their prices be inflated inflated and that can lead to not so great companies being propped up and it can also lead to good companies I'm being so overprice that maybe your own metrics get a little bit skewed inside your head. Which is the scary part? But we're GONNA talk about a method another method. Is this the method that you wanted to talk about. No this this is just sort of leading to that okay. So the second. We've talked about actually quite a bit here. There was was developed by Robert Schiller at Yale. WHO's the second did the Schiller? Pe Ratio. I have to say if anybody wants more information about this you can pick up our book. Invested which goes into excellent detail plug about pursue erase show. But you can listen to it here for free go ahead and what what show did it was so bryant was to find a method that shows that the market can be irrational from time to time and when it's irrational and you're buying into it and it's irrationally high your long-term rate of return by owning the whole market which is typically what people do in their 401k. They diversify across the whole market. You ready to return it in. The whole.

Boeing Robert Schiller pets.com CEO Sony bryant Yale
"robert shiller" Discussed on Newsradio 970 WFLA

Newsradio 970 WFLA

01:40 min | 2 years ago

"robert shiller" Discussed on Newsradio 970 WFLA

"Six four four nine maybe you were worried worried about some of these risks that Steve outlined risks to your retirement income and if you want to get serious about that get a plan that gives you more confidence as Steve said at this point it's not about making you a whole lot of money not hidden those those home runs but making sure that your your income is protected call today seven two seven two two eight six four four nine because Steve we don't know what's coming down the line for us you know with the economy we are going to get some great insights real special edition of the show today we invite Nobel laureate and professor of economics at Yale University Robert Shiller's our guests a little bit later Steve I'm looking forward to that that's going to be fantastic you know any time that we can sit and listen to a true seasoned pro somebody who's got thirty forty fifty years under their belt that's fantastic and I'm I'm definitely looking forward to it because you know Meghan when it comes to retirement planning investment planning there's a lot of things that people are just consistently doing wrong and for them to tune in and hear this message I think it's going to be very powerful indeed and of course professor sheller he is the go to for all things finance economics what's happening on Wall Street and we ask him what's in store for people looking to retire soon he's gonna address that so stick around for that we have Nobel laureate professor Robert Shiller professor of economics at Yale University he is our very special guest right here on the Steve Allen retirement wealth show Steve's number if you'd like to get in touch seven two seven two two eight six.

Robert Shiller Meghan Yale University professor of economics professor Steve Allen
"robert shiller" Discussed on Newsradio 970 WFLA

Newsradio 970 WFLA

05:06 min | 2 years ago

"robert shiller" Discussed on Newsradio 970 WFLA

"It's an absolute pleasure to be here with professor Robert Shiller he's a Nobel laureate he is the professor of economics at Yale University and you probably know him as a New York times bestselling author he's the author of irrational exuberance and his newest book narrative economics just came out this year professor it's great to be with you today right and it's a pleasure for me to here is a startling statistic that I want to begin with ten thousand baby boomers are retiring every day how ready for retirement is this generation well I remote ready for retirement on average and then it is a go but it still isn't good enough a great many people are retiring with virtually no savings the savings would be just an hour so they're called house tour you know I I think people today are not so eager to move in with their children the third service and support them but hello I used to be very common so I think you're ready for some disappointment that ran out of money before they die and I know that's one of the biggest concerns of people entering retirement is running out of income before they passed away and I want to talk about just this state of the economy right now and what we see out there interest rates we know they are not what they used to be we have bond yields at historical lows stocks might not be reliable so how should people nearing retirement begin to change their mind said what kind of thinking needs to shift professor well I think there's a lot of differences of opinion about that because we don't know the future the unilateral statement is that every time you have to plan for a less risky investments because they can't they can endure the downturns in the market whether being suffering Mar because they don't have the other income and some of them do retirement is often partial but those who are totally retiring will not have labor income and whether they do if there's a collapse in the markets so it went what can we do anticipate that rest I think the the best thing to say is you want to diversify your portfolio and weird reliance on any one asset class and yet you'll probably do well right now and if you're making sure that our dimes professor we know there's an election coming up that can certainly influence what the market does but we all know it's not just elections right there are natural disasters we have international conflicts the list goes on why is it that the market can so easily be affected by all these outside factors okay that's counter show them anything you're an economic but I think that their name is on it with him and psychology if you look at the major market model they they're not justified by what happened yeah we need efficient market geo which has been very popular I think it's losing its popularity there was entrance to the fundamentals there's always some fundamental reason so the stock market crash of nineteen twenty nine they would say happened because people start a new person coming but I think that is a right they didn't see the depression stopping in after the stock market crash and then it's got scared so you know it's a little bit hard to generalize from history history is so complicated but I think we learned that there are risks that we shouldn't be here in a minute by them you know even during the Great Depression most stocks hi even the the Dow Jones industrials has arrived they didn't go bank remember stream as bankruptcy and that was the worst depression error that I think people have to avoid being too stressful but at the same time be practical and to diversify it goes back to that human psychology you mentioned and there is a lot of noise out there professor people always speculating when the next crash or recession will be an in your research I want to ask you have you seen anything that shows that consumers are affected by what's being said in the news in the media and then in turn that if that's what the market does yeah this is a subject of my notebook narrative economic miracle is stories with the mall stories that change the way you think about staying in Arabic there is a change that make you would not want to spend money or into the us that as you had and where things I know it's hard to prove I know because he had a credit or law that is he is that right I think I have a pretty good case that psychology scenes back and the narratives scene back into the market and that we have to watch it narratives as ray without one hamburger merit is about confidence that markets are affected by confidence a little better to strengthen them in a row that Seamus speech in which he said the only thing we have this.

Robert Shiller Yale University professor professor of economics
"robert shiller" Discussed on 710 WOR

710 WOR

01:38 min | 2 years ago

"robert shiller" Discussed on 710 WOR

"Whose dad died in nine eleven he needed something to kind of get through that the tough part numbers. those few months some really else who felt the same way as first months afterwards or just a blur emotionally numb so to have those stories the kind of like the moon vamp helped us through the tough times. ten years old some of them are yeah. it'll kids kids here is just now Robert Shiller CO his dad died of nine eleven related cancer thank you my dad Prowse definitely something that you want me always do and I took the FDNY says the same month that my father passed away and I live with a cancer that's something amazing you know there were some towns I'm a Long Island I know where my girlfriend grew up where a lot of the firefighters live so you know told towns are just devastated by all the nine eleven emergency workers who were killed so of the thirteen there are two sons from one firefighter and the son and daughter of another hero is helpful in the same family wow really amazing tribute to people who are just a. you know that that they just don't get talked about and thought about as much as we should you know really they with the true heroes and and any thirteen kids there are following in their legacy just a remarkable story not right the impeachment train has left the station what are the consequences for the president and for the Democrats. I think we'll discuss but first let's get the news at seven o'clock. vacation.

Prowse Robert Shiller FDNY cancer president ten years
"robert shiller" Discussed on WCBM 680 AM

WCBM 680 AM

01:35 min | 2 years ago

"robert shiller" Discussed on WCBM 680 AM

"I speak to save energy saving your same bland everything's the same it went from sixteen to nineteen after twenty eight maybe it's time to start looking at our winds it may be just as delicious but a much better value but this is a good example we're sharing this story with you today because this is exactly what's happened in the stock market again one of the most valuable market forecasting tools that we use to help determine if stocks are on sale fairly priced a ridiculously expensive it's called the Shiller P. E. ratio and it's named after Robert Shiller who the Nobel Prize winner won the Nobel Prize in economics you see the fair cost of stocks is about sixteen dollars many the stocks are fairly priced when the Shiller P. E. ratio is a sixteen here's the rub we are nowhere near that no but stocks are still selling at twenty eight dollars just like that bottle of wine so maybe it's time to have a look at other options that he just as delicious but give you a better value consider this the Shiller P. E. ratio is it's really high right now and the only time that it's really been higher is back in get this December of nineteen ninety nine right before the dot com bubble burst think about that the market lost almost fifty percent of its value in two years took a big hit for almost two years that's why when preparing for retirement income plan we approach things differently with with our exclusive on track review.

Robert Shiller Nobel Prize two years twenty eight dollars sixteen dollars fifty percent
"robert shiller" Discussed on FT Alphachat

FT Alphachat

04:07 min | 3 years ago

"robert shiller" Discussed on FT Alphachat

"They didn't initially no all the things that journalists today know about how to create a of article that goes viral one of the tricks that news media people use is to read each other and read newspapers and other countries or news broadcast in other countries. Because they they might have an idea that is contagious. And you wanna you wanna use that idea? Speaking of contagion, should economists be on Twitter or is there more danger there than reward? Well, I'm on Twitter, although I'm very cautious about what I say. So I'm not. I'm not saying the game of trying to go viral on Twitter. I think that the the professions have a duty to maintain their independence from current narratives and speaks the truth. And I take that as something that can be done on Twitter at sequential of how you how you how you choose your words. Let me let me leave you with one last question five or six years ago, and I've never forgotten this. I was writing a profile Tyler Cowen the economist. And he said, what is a model is a novel model, and he left the question hanging there, and I don't have a good answer. But sometimes I suspect that novels are just as good if not better and creating narratives at at at helping people understand very simple mechanisms to understand how the world works. I I think there are models. I think there are novels that have been everybody's influential in how we see the world. And how we think about economics is as models particular genre of novel is the historical novel question. It's interesting question, which should you read should you read historian, or should you read a historical novel, then the historical novel with invent dialogue. Now, you know is invented. But if if it's a good novelist that novelist will try to capture the true essence of a time in in dialogue. That has created ultimately our judgments are very focused by dialogue in even a fictional dialogue. Maybe more effective way of writing history. I think the movie the big short, which features your friend, Richard Thaler, did exactly that it invented dialogue was honest about the invented dialogue. But I think is probably more definitional in terms of how. America understands what happened in the crisis than possibly any other work that's done. Because it's such a compelling piece of narrative some novels have been historically important. I'm thinking of Harriet Beecher stowe's eighteen fifty two novel uncle Tom's cabin about abuse of a slave named uncle Tom evidence is that that novel had such emotional impact that and why did it? It was just a very well written, and how they impact on people's feelings that ultimately, you might argue that to the American civil war, and the abolition of slavery people are debate over whether the civil war was really a war over slavery. How can we resolve that debate? But one one is suggestion I have for anyone who wonders about that read uncle Tom's cabin. You will know it will generate even today one hundred more than one hundred years later. It will generate emotions in you that you could see you can feel how they could lead to war over chiller. Thank you. My pleasure. Alpha chat is produced by Dan Richards at the road center for international economics and finance Brown University and Amy Kean from the financial times, we posting show notes on alphaville with links to Robert Schiller's speech in papers on market narratives. But as always this is a reboot, and we genuinely want to hear from you. We want to know who you are. How you listen. When you.

Twitter uncle Tom Tyler Cowen Harriet Beecher stowe Richard Thaler Brown University Dan Richards Amy Kean America Robert Schiller one hundred years six years
"robert shiller" Discussed on FT Alphachat

FT Alphachat

03:47 min | 3 years ago

"robert shiller" Discussed on FT Alphachat

"I watched a clip again, and again, and again because I was fascinated by it of Jim Cramer on CNBC talking about exactly this. And the narrative was the fed doesn't get it. I get it. Because I'm making the phone calls to people in markets who are terrified right now. This was in about October. I think and the narrative was the people he must have been calling in markets must have been these people who have so much riding on the equity markets. Right. Who were so leveraged that the price of their the stock price of their company makes a massive difference in a way that it wouldn't for me. But that narrative, I'm calling people. They know stuff the fed doesn't get it. I get it. They can't raise that's an incredibly powerful narrative with the potential to infect all of us and not just people who have a stake in highly leveraged corporations. I think that's. A little overstated that they had doesn't get it people on the fed, and the moves that they've made up is not that dramatic because I current rate of inflation the real interest rate on federal funds is just a little bit above zero. And and it's been almost ten years since the bottom of the market. So isn't it time to go back to a normal market? So I don't think these people are crazy and just don't get. But you may be right that it's a narrative. That's so I agree. I don't think the fed is crazy doesn't get it either. I that's why kept on watching that clip. Is it was fascinating the way he was portraying the fed. I mean there there. I mean of of all the groups of people who are trying to look at problems rationally and come up with rational answers. The the Federal Reserve system is pretty high on my list. So I I don't agree with him. But I do think that he provided a powerful narrative if you're inclined to believe him. So Jim Cramer has two personalities when I've met him individ-. Usually perfectly rational reasonable guy. But he he is now the star in a show called mad money and he's deliberately putting on a show. I mean, I think he would admit it. If pressed its show that he may be crazy, but he is insightful. And so he's very successful because of the contagion of of the mad money narrative. Well, it is not traditionally the job of an economist to create narratives, it's the job of an economist to understand the world as best as he or she can. And in fact, I have a job, thankfully, because it's my job create narratives based on all that data. If there are narratives out there, and they affect markets in ways that aren't completely based on any kind of rational appraisal of actual data do a communists need to learn how to not just write papers. But right narratives to combat the other narratives that are out there. Some economists who have to do that. It's a difficult. There's has no science to doing that. However, some economists becomes speechwriters for politicians. That's when you have the opportunity of perhaps to experiment with Nick, it's it's just not an exact science and to know what to do. Go back to the nineteen twenties, which I was talking back Calvin Coolidge was president then and he kept trying to talk up capitalism in the market. He was trying to create a narrative and he was a success for moderate success for a while. And then it suddenly turns on him. And the narrative is that. He's at fault for having created a crisis and Herbert Hoover during the early nineteenth thirties. When the depression was underway kept saying it will be over soon thinking that that would create confidence, and he was supposed to be a smart president who would do stimulus policy to overcome the depression..

fed Jim Cramer Calvin Coolidge CNBC Herbert Hoover depression president Nick ten years
"robert shiller" Discussed on FT Alphachat

FT Alphachat

04:11 min | 3 years ago

"robert shiller" Discussed on FT Alphachat

"That makes suddenly makes a new strain of the virus very contagious or it can also start from some change in the environment. Like, rainy weather might keep us in together more. So we spread the disease faster things like that. But the explanation of an influenza epidemic always released to something that we don't even see or think about I think. It's the same with economic epidemics. I can't name the reason why the volatility of the market has shot back up. Again. It's something that diverted our attention. It may not be very quotable, very distinct. But it has created a epic attention toward the stock market. And I might also say the housing market has shown big changes in recent months. The futures market at the Chicago Mercantile Exchange for home prices is showing a sharp decline in expectations for future prices and all the indicators in the housing market in the United States are weakening. Now, all of a sudden and for no apparent reason? I mean, you could say the reason is that housing starts are down. But that's that's not an exaggeration. 'cause that's that's a result of some change. In thinking is this narrative based on the Federal Reserve series of decisions continue raising rates this year that is one of a whole constellation of narratives that impactful at the moment. I think that the other things that are operating. Now, our worries about the trade war. Worries about the thought that we're overdue for a crisis and judgments of other people's confidence that you derive from a lot of stories and observations of people. So this is an inherently unstable system the longer an expansion goes on are we more susceptible to infection by narrative as as a bull market continues. We keep thinking we keep having these conversations amongst ourselves about how this can't go on forever. And once your prime to think this can't go on forever. Is that the moment which your immune system is down? I think that that sounds like a good good story. I don't have any exact science now. Now because you know, it can go either way that's the problem. When you when you think the market is going up crazily, you might react different ways to it. Some people will react by selling and some will react by by it. It's a numbers of people. How many people are in one category versus the other? So it's like a tug of war. If you're watching people, you know, what I mean, we have a long rope. And you have to teams pulling on opposite directions on the road. How do you know which way it's going to go maybe one thing is to count. How many people are on each side? And also look at how spirited they are. It's that kind of judgment which is inherently difficult to make without even with a lot of data. It's difficult to predict where it's going. I think we're in a dangerous time in the stock markets now because so many people have had their confidence. Shaken they may think of it as a buying opportunity, and then be willing to outweigh the selling incentives that many people have, but it's not clear who's going to win this tug of war. Let me try out a narrative on you one avenue of infection. If we're gonna continue this metaphor might have come from financial markets commentators. There are certain companies and people in financial markets that have a lot more at stake right now than those of us who own houses and and live on a salary. We know that corporations over the last five years nonfinancial corporations have borrowed a ton of money, which puts them in a more delicate position as they watched. Markets. That's one we know that there are more levers loans, which is basically the same story. Right. That there that they've really taken out a lot of debt, which means they're just really swinging on the price of stock of their company..

Chicago Mercantile Exchange Federal Reserve United States five years
"robert shiller" Discussed on FT Alphachat

FT Alphachat

04:51 min | 3 years ago

"robert shiller" Discussed on FT Alphachat

"Just to make sure I understand it correctly, you famously put together this historical time series of equity valuations. And so we can look at it. And we can sort of see that it's historically stock markets the United States or historically overvalued still. But when you look at the declines of the last two months, you don't necessarily see something based on any kind of data manufacturing data anything internal to the stock market. You actually see something based on a I'm sure you'll have a better word for this. But a mass psychosis. I tend to avoid using the term psychosis. It seems kind of strong language. The same thing happened in one thousand nine hundred twenty nine famously the stock market rose thirty percent in the five months before the peak of the market in twenty nine and then it crashed for no apparent reason that earnings were high the economy was moving well, but suddenly it crashed. And again, it was talk. I think there was a a new narrative that developed in one thousand nine hundred ninety nine just as there is a new narrative developing today, you know, sometimes I look at that chart that we can get off of your website that just looks at historical Cape, data priced equity ratio. And I think well it's got to happen sometime. So why not now is is narrative? Yes, it is. There is a narrative that stock market movements repeatedly go between booms corrections and bear markets. And so, but then the question is is this it back in January February of twenty eighteen there was a ten percent drop in the stock markets and people were wondering back, then is this it, ultimately, they decided it was not it and the markets stabilized. How did they reach that decision? What why did it stop? And why has it resumed recently? I don't have an exact science for this. I think it has something to do with the the whole array of stories that are current at that time, and it's a noisy feedback. It's not logical irrational there, there were some leading figures who raise the issue that maybe this is it this is going to be a. A serious bear market. And they they sounded particularly convincing at the time. It may also have something to do with politics. That's getting edgy more evidence of polarization the emotions associated with that. Maybe more conducive to thinking that this would be a time of bear market. And we can see that in other economic sentiment data that there is a spread between the way Republicans feel in the way Democrats feel about markets that can't be justified by anything other than politics. Yeah. Economists have to take account of politics that those are the major things that drive the market. Well, of course, Donald Trump promised to cut corporate taxes, and he did. And so that puts an upward impetus on the market. So you have to judge the politics of the situation. Now, it doesn't seem like it's especially clear where we're heading in US politics at the moment. And that has something again to do with the market. But there wasn't overall shift in sentiment looking at the Michigan consumer surveys and the shift in sentiment was overall down. But it was almost it wasn't tireless compiled of downward movements from Republicans after the loss of the house in November. That to me is fascinating is that this this shift in sentiment is actually just about Republicans feeling bad? I don't want to minimize Republicans feeling bad. But it's very it's very sharply polarized measure, but this relates to very basic fact that we we all have different narratives and the markets, depend on the aggregate of all these narratives, I think that in the future. We'll have more of a science to understand these things than we do now because the economics profession is not in the habit of looking at narratives but afterwards when when we become more data or we have a lot of data that relates to evidence about narratives as this develop. Further. I think we'll have better ideas. So more broadly, not just talking about this moment in markets. What do we know about how a narrative starts, and what do we know about how it spreads? Well, I would say that narratives are like diseases influenza epidemic. Come. They don't know. They can't forecast them how severe well. They know it seasonal, but they don't know how severe the next one will be in disease epidemics starts with typically a mutation..

Donald Trump United States psychosis influenza Michigan thirty percent five months ten percent two months
"robert shiller" Discussed on FT Alphachat

FT Alphachat

02:26 min | 3 years ago

"robert shiller" Discussed on FT Alphachat

"I'm Brendan Greeley and the US editor for FTE alphaville this chat. It's a project for the financial times and the road center for international economics and finance at Brown University. We were in Atlanta for the meeting at the American economic association this weekend, we found Robert Schiller. We dragged him over the podcast table. There are a lot of reasons for you to know who Robert Schiller is he won the Nobel prize in two thousand thirteen and yes, I know the price economics is not an actual Nobel prize. Don't ask me on this one. Robert Schiller won the prize for showing that stock prices move more than corporate dividends. That is stocks are not necessarily worth what companies pay you to hold them. Stock markets are not completely efficient more recently. Robert chillers been thinking in writing about narrative two years ago at this conference. He gave a speech he argued that markets are beholden to stories don't necessarily have any basis in data narratives, economists, look down on narratives as silly Schiller said that if you want to understand markets, you have to understand stories they start and how they spread I think that in the future. We'll have more of a science to understand these things than we do. Now. Because the economics profession is not in the habit of looking at narratives, I asked him about the last two months in stock markets at about the narrative that was driving those declines. The talk has been for most of a decade when will the fed raise interest rates again, they started raising interest rates in twenty fifteen. They've been talking about it for years. Suddenly the markets are reacting as if those a crisis of interest rate increases, this doesn't look rational. But what it does look to me and to many others is as the result of some new talk. It's talked up. It's finally come that the interest rates are finally having an effect. But why are they finally having an effect? It's because of the talk so it's kind of circular it's a feedback. It's the result of people reacting to other people's talk and not particularly Jerome Powell's talk, which is so mild and unexciting that he's doing that as chairman so as not to Royal the markets he staying on a path which was the now. Bounced before and yet now, it seems like news this is because of the contagion of narrative there contagious now as part of a feedback from the stock market initial stock market declines and they continue to build as an epidemic..

Robert Schiller Nobel prize Brendan Greeley Brown University US American economic association Atlanta Jerome Powell editor chairman two months two years