What's going on?

In an interview with the Financial Times over the weekend, Nobel laureate Robert Shiller said that his current research is suggesting that investors feel the stock market is overvalued to an extent not seen since the dotcom bubble of 2000.

What does this mean?

Schiller conducted a survey of investors asking them how confident they are in the current price of stocks. He said, �It looks like a bubble,� and pointed to the tripling of stock prices since 2009. However, while�he said that the recent volatility showed people had �worried thoughts,� he also repeated his conviction that it is impossible to predict that this will lead to a stock sell-off right now (because he believes that the timing of any fall in the market is fundamentally unpredictable).

Why should I care?

1. This is a very smart man that has accurately predicted huge market sell-offs in 2000 and 2007. You might have heard of the Case-Schiller home price index in the US (named after him) or the CAPE�model for valuing stocks�(which he popularized). It�s worth paying attention to what he says.
2. One of his most relevant points is that timing the market is impossible. Instead, average investors should focus on maintaining a portfolio that is aligned with their long-term goals. By contributing to it regularly and �rebalancing� when appropriate, investors will likely maximize their long-term gains (rebalancing means making changes to the portfolio that ensures the mix of stocks, bonds and other assets remain in line with the investor�s aims).