R. Schiller: The situation is very similar to that of 1928

US indices are historically the highest. The growth rate, however, exceeds the growth of companies' profits, sending leading financial ratios like SARP at alarmingly high levels. This alerts the creator of the ratio - Nobel laureate Robert Schiller, from Davos.
He shared his worries about the market before Yahoo! Finance in Davos.
"In a sense, the market is now very similar to the one in 1920 - I would say 1928," Schiller said.
Then, the US indexes were rising seriously until they failed remarkably in 1929.
Calvin Coolidge was the president. And pro-business oriented," Schiller noted. "Everything looked good. Anti-regulation. Same story. This is part of the story," added the Professor of Economics.
Today, the United States has again a pro-business president, in the face of Donald Trump, who has been pushing for deregulation, similar to what happened in 1928. And in the same year, there are a lot of people who warn about the overpriced market.
"Then there were a lot of people who warned that the market was overstated. And people were beginning to wonder when there would be a correction? And, ultimately, a correction happened," Schiller recalls.
Schiller, of course, did not suggest that the market would collapse next year. According to Schiller, however, part of the reasons people buy shares is that "it makes them feel better for one or another reason."
"Young people today have to plan the next 50, 70 years. So what would they do now? This gives emotional decoration to all their decisions. It seems more and more acceptable to invest in stocks, even if they look expensive. Especially technological ones," concluded Schiller.