Time to worry about stock-market bubbles

Yet any argument that depends on the notion of a new paradigm is one you should treat with a healthy amount of skepticism. Those arguments are usually wrong. They were wrong in the 1920s, when the economist Irving Fisher coined the phrase “permanently high plateau” to describe stocks. They were wrong in 1999, when the book “Dow 36,000” appeared. They were wrong in 2007, on the eve of the financial crisis.

“You can always think of reasons of why now is different,” Mr. Shiller told me, when I called him recently to ask his view of today’s stock prices. “But maybe the mind is too creative in thinking of how it’s different.” As John Campbell, a Harvard economist who has collaborated with Mr. Shiller, puts it, “One should be skeptical of ‘This time is different’ arguments.”

We obviously can’t know which way stock prices are headed. But the evidence, as I read it, suggests that stock prices are now high. The best assumption – for retirees, future retirees, other investors, pension-plan managers, federal budget analysts and anyone else whose life depends on stock prices – is that returns in coming years will be modest at best.