GARY SHILLING: Stocks are expensive, and a ‘shock’ could send them plunging

Dr. Gary Shilling, the president of A. Gary Shilling & Co., spoke to Business Insider CEO Henry Blodget about the stock market, which he views as expensive, citing the Shiller P/E ratio, which is roughly 40% above its historical norm. He doesn’t necessarily see them falling apart, but says they’re starting at a high level. Shilling shares his thoughts on the end of the eight-year bull market, saying that some sort of exogenous shock could derail it, as well as tightening from the Fed. He also breaks down his forecast that the 10-year US Treasury will go to 1%, noting that we’re more likely to see deflation than inflation, which is beneficial to his forecast.