Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Robert Shiller on Thinking Outside the Box and Seeing Things Others Don't

In 2000, the Dow Jones Industrial Average was at record heights, with tech companies trading at valuations that made you think the old rules of finance no longer applied. If Cisco (Nasdaq: CSCO  ) kept up with analyst growth projections, it would have eventually grown larger than the U.S. economy.

The world was different, people said. Recessions were a thing of the past. Technology would create limitless prosperity. The stock market wasn't a bubble. It was reflecting the new reality.

Yale economist Robert Shiller didn't buy it. He wrote a book, Irrational Exuberance, explaining why there was no way to justify valuations.

That was his first win.

Five years later, real estate was the new boom. Since land was a limited resource, prices could only go up, people said. And since housing was a leveraged investment, it was an easy road to huge wealth.

Again, Shiller didn't buy it. Again, he wrote a book about it, explaining why prices were way too high.

That was win No. 2.

How do you stand apart from the crowd and see things others don't? I asked Professor Shiller in an exclusive interview last month. Have a look:

What do you think? Share your thoughts below.

Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. Follow him on Twitter @TMFHousel. The Motley Fool owns shares of Cisco Systems and Oracle. The Fool owns shares of and has created a bull call spread position on Cisco Systems. Motley Fool newsletter services have recommended buying shares of Cisco Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (6) | Recommend This Article (21)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1757802, ~/Articles/ArticleHandler.aspx, 10/20/2016 4:11:39 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,186.01 -16.61 -0.09%
S&P 500 2,141.26 -3.03 -0.14%
NASD 5,246.33 -0.08 0.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/20/2016 3:56 PM
CSCO $30.20 Down -0.16 -0.51%
Cisco Systems CAPS Rating: ****