QUOTE OF THE WEEK
“The bad news is, time flies. The good news is you’re the pilot.” – Michael Altshuler
TECH CORNER
When this Yale economist warned of the biggest market crash in history, no one believed him. but when the dot-com bubble burst, wiping out $5 Trillion in wealth, no one was laughing.
The late 1990s saw a market frenzy like never before. Tech stocks were minting new billionaires every week. This time is different. They said “The internet changed everything. But one economist saw through the mania”.
His research revealed something terrifying: markets aren’t driven by logic, but by stories we tell ourselves. When these stories become divorced from reality, bubbles form. And this bubble was about to burst.
Meet Robert Shiller, the economist who saw it all coming.
The NASDAQ collapsed exactly as he predicted. 78% of the market value was gone by
But this was just the beginning of his prophecies. In 2005 he warned of a housing bubble. Again he was dismissed. “Housing prices never go down nationally” But Shiller saw the same psychological patterns emerging.
His housing predication proved devastatingly accurate. The 2008 crash wiped out $8 trillion in household wealth.
This work on market psychology earned him the 2013 Nobel Prize.
And now? He sees three dangerous patterns forming again.
Warning 1: The AI Revolution’s Dark Side. In November 2024 Shiller pointed out something troubling: AI isn’t just transforming technology, it’s warping market psychology. Just like the internet boom of 2000, we’re seeing mass delusion take hold.
Warning 2: Dangerous Market Levels. The S&P 500’s CAPE ratio (Shiller’s famous metric) just hit 35. For context: This level has only been exceeded during the dot-com bubble. History shows such elevated valuations precede significant downturns.
Warning 3: In August 2024, Shiller emphasized how investor behavior mirrors past bubbles:
*Dismissal of traditional metrics
*Blind faith in new paradigms
*Belief that historical patterns no longer apply
And Shiller’s genius? It lies in behavioral economics. He proved that markets aren’t purely rational. They’re driven by human psychology – our hopes, fears, and cognitive biases. This insight revolutionized how we understand market cycles.
The most successful investors aren’t trying to predict crashes. They’re following systems that work in any market conditions. Because here’s what Shiller’s research really teaches us is that markets are predictably unpredictable. This is why data-based trading systems are so powerful.
They don’t eliminate emotions, that’s impossible. Instead, they help you control them.
Trust your process over predications to manage your fear and greed and stay objective when others panic.
Trading success isn’t about becoming emotionless, it’s about developing the psychological skills to execute your system consistently. This is especially crucial for retirement portfolios.
Because you are managing retirement fund, you can’t afford to:
*Let emotions drive decisions
*Chase market predications, and
*Risk major drawdowns.
That is why we use data-based portfolio management.
