Overvalued Markets

For your weekend viewing, I submit this week's episode of the PBS WealthTrack program hosted by Consuelo Mack. The topic is one that I'm sure is on everyone's mind -- is the current market overpriced or, do the major changes ahead -- a new administration, the vaccine, hopes for an economic recovery -- make room for even more growth? Seek some insight below as she interviews an expert on this subject, Robert Shiller.  Enjoy the weekend.  

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Sponsored by: January 7, 2021 Dear WEALTHTRACK Subscriber, A shocking invasion of the U.S. Capitol by pro-Trump protesters and a belated blue wave with the Democrats taking control of both the White House and Congress did not phase the markets. Their bull run continued on Thursday with the Dow hitting its second record of 2021, and the S&P 500 and the Nasdaq each achieving their first.  What explains the market’s equanimity? A return to business as usual: once order was restored legislators went about their business and confirmed President-elect Joe Biden’s win in the Electoral College.  And looking to the immediate future: Democratic control of both branches of government will mean more spending. The markets anticipate bigger stimulus packages and investment in the economy. All near term positives for stocks.       We have a special treat for you this weekend, an interview with Robert Shiller, a Nobel Prize winning economist, a pioneer in the field of behavioral finance, long-time Yale professor, financial innovator and prolific author. Among his best selling tomes are Irrational Exuberance published just before the tech bubble burst, Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism which came out as the housing bubble induced global financial crisis was unfolding, and more recently Narrative Economics: How Stories Go Viral and Drive Major Economic Events.  Shiller is also the co-creator of the widely cited gauge of U.S. housing prices, the Case-Shiller Home Price Index, and creator of the cyclically adjusted PE ratio known as the Cape Ratio which is a price-earnings ratio for the S&P 500 based on average inflation-adjusted earnings from the previous ten years. Because it includes ten years of earnings many consider it to be a more reliable gauge of market value.  I am honored to say Bob has also been a guest on WEALTHTRACK since the very beginning and we always cherish his time with us.  His presence could not be more timely. He is known for identifying the tech and housing bubbles long before anyone else did, and here we are in the midst of an economy crushing pandemic with home prices booming and stock prices hitting new records.  We started with the stock market, his analysis of the record-setting performance. Also, in this week’s exclusive EXTRA feature, Shiller discusses his extensive research on the virus-like spread of information both true and false, a phenomenon we witnessed today with the unfounded allegations of election fraud being widely disseminated, believed and acted upon in our nation’s Capital.      If you miss the show on public television, you can watch it on our website over the weekend.  You can also find the WEALTHTRACK podcast on Stitcher and SoundCloud as well as iTunes and Spotify. Thank you for watching, have a super weekend and make the week ahead a healthy, profitable and productive one. Best regards, Consuelo