Robert Shiller's Case for a Stock Bubble

Robert Shiller rightly deserves his Nobel Prize as perhaps the world's leading expert on asset bubbles. (I beat him by a year on the housing bubble in the United States.) But I think he gets the story badly wrong in making the case that there is currently a serious bubble in the U.S. stock market.

Shiller's rationale is that the price-to-earnings ratio is well above its historic average. Furthermore, he points to the large stock plunges the last three times the price to earnings ratio approac...