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Nobel Economist is Spooked Out By the Stock Market Right Now
So with these exemplary credentials to his name, it’s probably worth paying attention to what Thaler says about the stock market, especially when says the market is kind of freaking him out right now. In fact, in an interview with Bloomberg TV on Tuesday, Thaler said that that we might “be living in the riskiest moment of our lives, and yet the stock market seems to be napping.”
Thaler told Bloomberg TV that he was especially concerned by by the political climate in America, in which the “Republican leadership does not seem to be interested in anything remotely bipartisan, and they need unanimity within their caucus, which they don’t have.” He also pointed to President Trump’s repeated jabs at Republicans in Congress, which could be eroding relationships with key allies he needs to get legislation passed.
“I don’t know about you, but I’m nervous, and it seems like when investors are nervous, they’re prone to being spooked,” Thaler said, “Nothing seems to spook the market” and if the gains are based on tax-reform expectations, “surely investors should have lost confidence that that was going to happen.”
The economist said that he didn’t know “where anyone would get confidence” that tax reform is going to happen.
Thaler, the Charles R. Walgreen Distinguished Service Professor of Behavioral Science and Economics at the University of Chicago Booth School of Business, won the Noble prize “for shedding light on how human weaknesses such as a lack of rationality and self-control can ultimately affect markets.”