Robert Shiller, professor of economics at Yale University and a Nobel laureate, says the steep run-up in this market rally is similar to the excesses of the 1920s before the October 1929 market crash and Great Depression.  Professor Shiller in his CNBC interview on Friday September 28th said that the longest bull market in history could be showing worrying echoes of one of the greatest crashes Wall Street has ever seen.

What I found most revealing when watching the interview was Professor Shiller pointing out a-never-been-heard-before reason why the US stock market is now the world’s most expensive; the US’ commander in chief Donald Trump has painted a picture of the economy that is much better than the reality.  This has resulted in investors being more comfortable and more willing to take risk.  This five-minute interview of Dr. Shiller is a must view.

Robert Shiller draws troubling parallels between the market today and the late 1920s from CNBC.

Excerpts from 5-minute video:  

  • Shiller says this rebound is driven more by the bullish market narrative than hard data.
  • The roaring ’20s and dot-com mania of the 1990s share in some of that bullish sentiment, said Shiller.
  • The S&P 500 hit its market bottom in March 2009. Since those lows, the S&P 500 has rallied 334 percent in the longest stretch on record since World War II without dipping into a bear market.
  • While markets briefly fell into a correction earlier this year, stocks quickly recovered to reach new heights as recently as late September.

Shiller’s key quotes from interview:

“The 1920s is quite a legend that people are often thinking about, and I look at 1929 particularly as the end of the roaring ’20s and it ended in a bout of speculation. Between May and September of ’29 the stock market went up over 30 percent in just a few months.”

“At that time it seemed like it was a kind of gambling. The word gambling was used a lot to describe the market at that time so it became vulnerable. We’re not exactly in that circumstance but we do have the market that has surged since 2009 so there is something of that spirit today,”

“It was a similar story that was boosting the market but they don’t last forever and eventually the story starts to wilt,” he said. “It’s animal spirits — people’s excitement about the stock market, bitcoin and other things.”

According to my math the S&P 500 will decline by at least 60% from the current bull market’s peak to the new bear market’s trough.  I am also predicting that it will be 2030 before the S&P 500 is able to eclipse the high- water mark for the bull market which began in 2009.  

To understand my math and also the bear market and recession investing strategies that I am recommending from now through 2030, watch my recently taped two-part interview about the “Day of Reckoning Approaching for the market” which will air on the Fox Business Channel during the second half of October.   A private and pre-screening of my interview is exclusively available to alert subscribers. Click here to subscribe to free alerts.   

Below are my most recent must-read articles which pertain to the market being at high risk for a significant correction or a crash: