Robert Shiller, the Yale University economics professor and Nobel Prize winner recently came out with an uncannily prescient book for the current moment, "Narrative Economics: How Stories Go Viral and Drive Major Economic Events."
You might also know him from the Case-Shiller home price indexes, or the Shiller P/E ratio for valuing equities.
The 73-year-old spoke with Reuters about how contagions shape much of our lives — whether we realize it or not.
Q: What is your take on what is going on with coronavirus?
A: This is a very unusual event for the markets — not many events have their origins in a major exogenous crisis like this. That's not normally a thing that starts business cycles.
Q: What thoughts do you have for investors in moments like this?
A: The last time we were near a bear-market level, the market rebounded again to new heights. So some people are thinking that the same pattern will just repeat itself again. But I would caution them that the market doesn't necessarily do that, and that we could be vulnerable to more drops.
It's a high-volatility period. I would advise people not to take any extreme measures. Don't think it's the time to sell out completely, but also, don't conclude it's a big buying opportunity and push into leveraged positions in the market.
