Three US experts on stock markets and property booms have been jointly awarded the 2013 Nobel Prize for economics - in belated recognition that wild swings in asset prices cause havoc.
Yale professor Robert Shiller is the best-known of the trio, celebrated for predicting the dotcom bust in 2000 and the US housing crash seven years later.
His Shiller price to earnings ratio is followed by investors worldwide. It smooths earnings over a 10-year period to capture lasting value in equities.
The data from the last century suggests that the P/E ratio will revert over time towards a mean of 16.5.
The Shiller P/E gauge shows that Wall Street's S&P 500 index is currently 23.6 - or 43pc - overvalued. This is higher than on the eve of the 1987 crash.
"Shiller is one of the few really relevant economists for markets.
Companies can massage figures in the short run but they can't do that for 10 years," said Steen Jakobsen from Saxo Bank. Prof Shiller shares the prize - uneasily - with Chicago professor Eugene Fama, famed for work showing that stock movements are a "random walk" that cannot be predicted in the short run.
It is therefore folly to try to beat the market, though investor Warren Buffett has made a career doing exactly that.
Prof Shiller says markets are often driven by emotion; Prof Fama is the prophet of "rational markets", arguing that investors respond correctly to known facts.
The third winner is Lars Peter Hansen, a specialist in mathematical modelling. The Nobel Committee admitted that its choice was "contradictory" but said the trio all offered insights into the role of stocks, bonds, and property in driving economics.
"While asset prices often seem to reflect fundamental values quite well, history provides striking examples to the contrary, in events commonly labelled as bubbles and crashes," it said.
This year's award is the latest sign of new thinking since the Lehman crash in 2008.
Central banks have, until now, been in thrall to "inflation targeting", setting monetary policy to hold inflation near 2pc. This drew them into a trap.
Cheap imports from China and other low-wage countries in Asia led to falling goods prices, masking the build-up in global liquidity.
It lulled policy-makers into thinking they could keep interests very low, or even negative, in real terms.
The result was a series of stock and property bubbles across the developed world, culminating in the global financial crisis.
The US Federal Reserve has begun to pay closer attention to asset swings, ditching the Greenspan-era assumption that assets booms can safely be allowed to run their course.
Nobel critics say there is a risk that too much focus on asset prices could distract from the deeper causes of the global crisis, chiefly East-West trade imbalances, reserve accumulation by China and others, and rising wealth inequality.
All these effects lead to excess capital, yet this area of economics has been almost entirely neglected by the Nobel Committee.
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