Investors, who have driven down Greek stocks since voters elected an anti-austerity government determined to re-negotiate the country’s debts, may be overreacting, according to Nobel Prize-winning economist Robert Shiller.
“Investing in Greece right now just might not feel right,” the Yale University economist said Tuesday in London. The price of Greek stocks is ’’below anything I’ve seen in the US and suggests a spectacular investment,’’ Shiller said.
Shiller, who won the Nobel Prize in Economics in 2013 for his modeling of asset-price fluctuations, said that while the situation in Greece is challenging for investors, the stock price of Greek companies failed to reflect their earnings potential.
Greek bonds and stocks fell for a second day on Tuesday amid concern the nation’s new government will clash with euro- area finance ministers over its funding needs. The benchmark ASE Index has lost 35 percent over the past six months. The Standard & Poor’s 500 Index has risen 2.6 percent in the same period and reached a record late last month.
On Monday, SYRIZA leader Alexis Tsipras formed an anti- austerity coalition government with the Independent Greeks party. Tsipras, 40, has promised to keep Greece in the euro region while re-negotiating the terms of Greece’s debt burden.
“You can’t free yourself from the prison of the zeitgeist unless you become a smart beta person and start mechanically doing investments that don’t sound right,” said Shiller. It also makes sense to invest in Russian, Portuguese and Italian equities, according to the model, he said.
Shiller was speaking at a media seminar at Barclays Plc to promote asset management firm Ossiam’s new exchange traded fund, which will invest in Europe using Shiller’s CAPE model for identifying long-term under and over evaluations of equities. [Bloomberg]