Robert Shiller, a nobel prize winning economist, has predicted that the bull market in stocks could last several years, according to CNBC. Stocks “could go up 50% from here,” he said during an interview. “That’s what it did around 2000, after it reached this level, it went up another 50%.” (For more, see also: The 5 Biggest Stock Market Myths.)
Shiller isn’t the only one who thinks the stock market could enjoy significant upside, as Jeremy Siegel, who teaches finance at the University of Pennsylvania’s Wharton School of Business, has stated that should President Donald Trump leave office, the Dow Jones Industrial Average (DJIA) could surge 1,000 points even before Mike Pence assumes his new post, Barron’s reported.
It is the agenda of Republicans—and not Trump—that is pushing the stock market higher, Siegel told Barron’s. Should the president’s position deteriorate, key policy initiatives pushed by Republicans—including reducing corporate income taxes and cutting back on regulation—would still have a high chance of receiving the approval of lawmakers. Given these factors, stocks could gain 10% before the year is over, he told Barron’s.
U.S. Stock Valuations High
Amid predictions like these, Shiller advised investors to hold stocks, according to CNBC. “I’m not against investing in the stock market when you consider the alternatives.” However, he advised that the valuations of U.S. stocks might be a bit high, citing the cyclically adjusted price-to-earnings ratio (CAPE), which investors can calculate by taking a stock’s price and dividing it by average inflation-adjusted earnings over the last 10 years.
“If one wants to diversify, U.S. is high in its CAPE ratio,” he told CNBC. “You can go practically anywhere else in the world and it’s lower.”