Robert Shiller joined Consuelo Mack on WealthTrack this past weekend to discuss the ongoing problems in the economy. Shiller of course is notable for having predicted both the Nasdaq bubble and the housing bubble. He remains one of the few academics who understands how markets and the broader economy relate to one another.

In this interview Shiller explains why he believes the psyche of the investing class and the general economic participants are being negatively impacted by the economic malaise. He refers to it as a positive feedback loop that is very difficult to reverse. In equities, Shiller makes some rather alarming comments. He says the current volatility is not healthy and could very well be preceding a “substantial” decline in equities. He makes no firm predictions, but he maintains that the current fragile environment could result in major downside.

He explains why equities still appear expensive, why housing is likely to remain under pressure, why the general economy is likely to suffer a continuing malaise and why TIPS are his favorite investment currently:

Source: WealthTrack



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Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  1. … and why TIPS are his favorite investment currently:

    Why not? US Government debt is not an “investment” but a risk-free gift to the rich. What true investment is guaranteed to return all the principal?

  2. Why is it that we have economic theories that produce commenters on weblogs to say “amen”?

  3. The man who called the Nasdaq bubble and the housing bubble recommends bonds (tips) as the best investment today. Safe to say he does not believe bonds are a bubble.

  4. Maybe Barack Hussein Obama can fix that! A 15% wealth tax on Treasury holdings for positions in excess of a private jet plane’s value – say $10 million.

  5. The moving average of TIP divided by PTRAX is generating about 15% return a year. TIP has been gaining but tide is getting a little away from TIP.