Nobel prize-winning economist Robert Shiller just penned a scathing piece on Donald Trump’s effect on the equities markets, criticizing “excessive optimism” surrounding the new president.

He also said the Trump-fueled stock rally is “based on illusion”:

In the US, two illusions have been important recently in financial markets. One is the carefully nurtured perception that President-elect Donald Trump is a business genius who can apply his deal-making skills to make America great again.

Without question, many Americans have simply bought into Trump’s rhetoric and believe he’s the answer to their prayers. But it remains to be seen what — if anything — Trump can do to improve on an already-low unemployment rate and fairly consistent GDP growth.

Shiller’s next point will hit home for many investors — not to mention pundits that have paraded this number around so frequently over the past several months:

The other is a naturally occurring illusion: the proximity of Dow 20,000. The Dow Jones Industrial Average has been above 19,000 since November, and countless news stories have focused on its flirtation with the 20,000 barrier – which might be crossed by the time this commentary is published. Whatever happens, Dow 20,000 will still have a psychological impact on markets.

Shiller notes that Trump lacks consistency and clarity on what his plans are as president. What’s more the Dow’s rally actually began well before the election — back when Hillary Clinton was projected to emerge victorious — so it may not even be all that related to Trump’s surprise win.

Finally, Shiller points out that the Dow’s return since 2000 has been underwhelming in inflation-adjusted terms. With the Fed’s target of 2% inflation annually — or 22% per decade — it will take a lot more gains for stocks to keep up in the future.

Clearly, the markets are failing to price in the sheer amount of uncertainty that comes along with a Trump presidency. That means for investors, the next four years could be a very bumpy ride.

The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) was trading at $197.67 per share on Monday morning, down $0.29 (-0.15%). Year-to-date, DIA has gained 0.08%, versus a 1.22% rise in the benchmark S&P 500 index during the same period.

DIA currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #6 of 77 ETFs in the Large Cap Value ETFs category.

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