Nobel laureate Robert
Shiller of Yale University warned that this week’s market bloodbath may get
even nastier.
"It could be followed by even bigger and bigger moves," he told CNBC. "I have a general bias towards down because the market is overpriced, but these things unfold over years."
"It could be followed by even bigger and bigger moves," he told CNBC. "I have a general bias towards down because the market is overpriced, but these things unfold over years."
Shiller advised that the current plunge could "create aftershocks in either direction in the short-term," but he cautioned investors to not "over-focus on the latest news."
"When people who don't normally pay attention to the market are brought in, it can feed on itself like an epidemic," he said.
Shiller said that a stock-market correction, traditionally considered to be a 10 percent drop in a short time period, wouldn’t be “the end of the world.”
Shiller did say he thinks China would see renewed growth and was upbeat on a healthy U.S. housing market.
"The housing market has been going up at a good clip," he said.
He spoke as worries of a deepening China economic slowdown intensified on Friday after a private survey showed the factory sector shrank at its fastest rate in almost 6-1/2-years in August, hammering global stocks and commodity prices.
U.S. stocks dropped sharply for a second day following a sell-off in major indexes around the world on the growing evidence that China's economy is slowing. The Dow Jones industrial average fell 296 points, or 1.7 percent, to 16,694 as of midday Friday Eastern time.
(Newsmax Wires contributed to this report).
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