Nobel Prize in Economic Sciences winner Robert Shiller, who created the cyclically adjusted price-to-earnings (CAPE) ratio, told the audience at the annual CFA Institute conference in Philadelphia that he “would be inclined to recommend” what he sees as undervalued stocks.
“And that would be consumer staples, industrials, healthcare—and even technology,” said Shiller.
Fortune notes his latest comments are a bit of an about-face for Shiller, who not too long ago warned about inflated valuations:
That’s decidedly more optimistic than Shiller sounded just two months ago, when he said the stock market was “way overpriced” on the back of the Donald Trump election rally. And it’s especially surprising because tech stocks such as Amazon (AMZN, +0.35%) and Apple (AAPL, -0.06%) have been on a massive run this year, and now represent the five most valuable companies in the S&P 500. (The top-five list also includes Google parent Alphabet (GOOG, +0.30%), Facebook (FB, -0.16%) and Microsoft (MSFT, +0.37%).)
Shiller did warn that not all tech stocks are evenly valued, of course, but declined to name any specifically. But he did note that tech stocks “have always been highly priced, so recently they’ve been less highly priced overall than on average.”
In other words, tech stocks as a whole could have much further to run in order to catch up to their historical premiums.
In another mark of bullishness, Shiller told CNBC earlier this week that stocks “could go up 50% from here.” That’s a bold prediction from an economist who correctly pegged both the dot-com bubble and the housing crisis.
So the next time someone tells you tech stocks are overvalued, you might want to quote the bullish words of a certain Nobel Prize winning economist, and continue to buy, buy, buy.
The PowerShares QQQ (NASDAQ:QQQ) was trading at $141.13 per share on Friday morning, up $0.16 (+0.11%). Year-to-date, QQQ has gained 19.12%, versus a 8.15% rise in the benchmark S&P 500 index during the same period.