Shiller Says Stock Valuations Likely Irrational Exuberance
Trying to account for Wall Street record highs in the face of Main Street duldrums is a job for the bold and the brave. On its face, one would assume that a growing stock market would reflect a growing American workforce. As people gain wealth their desire for goods and services increases. However the current disconnect from the obvious has many calling for caution in the current market evaluations. Yale Professor and economic auhtority Robert Shiller examamines several possible reasons for the soaring stock market and gives insights into each of them. Yet in his final anlysis he concludes:
"So nothing I’ve come up with is a slam-dunk explanation for the continuing high level of valuations. I suspect that the real answers lie largely in the realm of sociology and social psychology — in phenomena like irrational exuberance, which, eventually, has always faded before. If the mood changes again, stock market investments may disappoint us."