Robert Shiller: Risk Of A Bear Market In 2019

Robert Shiller, sterling professor of economics at Yale University, discusses the U.S. Federal Reserve’s monetary policy and says that there is a risk of a bear market this year.

risk of a bear market

Robert Shiller: Risk Of A Bear Market In 2019

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Transcript

I think that the Fed has been kind of predictable mild ever since Janet Yellen. So I don't think I don't think that it's a it's a powerful narrative. But it's it's it's not a narrative that I think would generate a turning point in the markets. Well what then. Well I'm thinking that some narratives have been live in the recent past might come back and I'm picking particularly of the narrative that began in the beginning of 2008 18 January February we had a correction in the market a 10 percent decline. And then we had another downturn. Between September and Christmas Eve last year almost on the S&P 500 it went down from peak to trough nineteen point eight percent. It almost made this classical so-called definition of a bear market. These things I think weigh on people's minds. There's a sense that maybe it's finished for people who see a buy signal or maybe it's going to complete the job and go down further.

That seems to be the question is are we seeing a messy correction and a late stage long bull run that we've had or are we going to really get into the bear market this year. What would you predict.

Well I'm not and I'm not confident in my ability to predict but I think there's a risk. Yeah. The way I categorize it categorize risks in terms of narratives and this bear market narrative has taken a strong hold on our men or bull market. Since you know the term bear and bull market go back to the 19th century you know what they didn't use them very often were really into this. So we think of a bear now in today's environment we think of a bear market psychology as a huge driving force or or a bull market psychology.

There's the market and then there is the economy. And they don't always tell the same story at the same time. I mean you do have a strong view of what is happening in the U.S. economy.

There's another similar story it's the story that the expansion is very old now and if it holds until June it will have tied the record Sure. So I think that there is a there is a feeling of raw that the stock market might be due for some. Deflating now because it's been a long time and we've seen some hints of that we haven't seen the real deflation yet. And the economy is well.



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Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Prior to ValueWalk, Jacob was VP of Business Development at SumZero. Prior to SumZero, Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver