Even when it is coming from a Nobel Prize winner, the simplest financial advice is usually the best.
When economist Robert Shiller said last week he was considering "getting out of the U.S. somewhat" it quite rightly made headlines.
After all, he helped create the cyclically adjusted price-earnings (CAPE) ratio, sometimes called the Shiller P/E, which is now in the kind of nosebleed territory only seen twice before: just before the dot-com and 1929 crashes.
If he is lightening up on U.S. shares it is right to take notice.
Shiller went on to talk about the attractions of peripheral eurozone stocks, in Spain and Italy, as alternatives.
Rather than making a market call and then looking for a trade, I'd argue that it is what Shiller said next that is his best guidance:
"You have to save more; unless you have some special idea, realistically you are not going to get the same returns," Shiller told CNBC.
There, in a nutshell, is the current situation: bet on your ability to find gold among the dross or tighten your belt.
The big insight here is that if asset markets are expensive, as they appear to be, than you had better scale back your expectations for future returns. They may be quite poor taking today as a starting point.
Saving more is a simple, elegant, if perhaps painful way to insure against that.
CAPE P/E is a simple concept: divide share prices by the average of 10 years' earnings adjusted for inflation. Today, the CAPE P/E for the S&P 500 stands at 27.52. This compares to 44 in December 1999 and about 30 just before Black Tuesday in 1929.
Comparisons can be tricky, but if we compare the CAPE P/E of today with the historic mean of 16.58, the market is expensive. And this could mean low single-digit returns for years to come. May not happen, but worth insuring against.
A dollar saved today has a realness and solidity not enjoyed by prospective returns tomorrow. Unless you go in for Ponzi schemes you can be sure that all of the money you save today will improve your situation in the future. The same cannot be said for strategies, no matter how clever.
It seems to follow then that the more uncertain you are about future returns the more you should save.
The very high CAPE P/E is a source of uncertainty. Things may well be different this time. Equities may well have a great next decade. Perhaps not. Saving, as Shiller recommends, is probably your best hedge.
James Saft is a Reuters columnist.