ROBERT SHILLER: Our Anxieties Are Now Driving Up The Stock Market

Robert Shiller, Yale professor, and founder of the S&P/Case-Shiller home price index just appeared on CNBC to talk about the latest Case-Shiller report, which showed home price growth slowed some in July.

Shiller also talked about the stock market.

Author of the investing classic 'Irrational Exuberance,' Shiller gave a great insight into the current psychology of the stock market rise, and an alternative theory about why the market keeps going up.

"It's something about anxieties," Shiller said.

"You might think this should be the reverse, that the stock market should go down when people are anxious. People are anxious because of [geopolitical unrest], because of inequality, and people are worried about being replaced by a computer. All these things are on people's minds."

But because of these anxieties, Shiller said, people want to save more, and because the economy has been weak, investors bid up the price of everything and the stock market has been a major beneficiary of that.

To Shiller, the stock market is overvalued, but this doesn't mean it's a bad investment, given that Shiller sees a world full of bad investments.

Shiller's Cyclically-Adjusted Price-to-Earnings ratio, or CAPE ratio, is currently near 27, up from 23 a year ago, and well above the long-term median average of 16.

This has many people wondering the stock market is overvalued or if a correction, or worse, is looming. Shiller said he doesn't know: the CAPE ratio could keep going higher, or it might not.

"I don't know how to time the market," Shiller said. "I wish I did."

Stock markets are near record highs, bond yields are historically low, and while the pace of home price increases per the Case-Shiller index has slowed some this year, prices have been climbing for the last three years.

People often invoke the title of Shiller's book when thinking about why markets go higher, but it seems that you might be able to replace "exuberance" with "fear" and find not dissimilar results.

You can watch Shiller's comments on CNBC below.