The Dow and S&P 500 once again closed at record highs last Friday, and investors continue to be bullish on the American economy. Nobel Prize-winning economist Robert Shiller sees things differently and has been warning of market bubbles.

A bubble is a social epidemic of enthusiasm and excitement spread by word of mouth, attracting more and more investors into a market.”

In the new edition of his book Irrational Exuberance, Shiller argues that many traditional investment assets are now driven by investor psychology rather than fundamental realties. From housing to stocks to bonds, Shiller sees the American economy entering a new era in which traditional investment approaches need to be reconsidered.

Shiller spoke with Yahoo! Finance about the standard mentality of achieving long-term asset growth in the broader stock market.

A lot of people are holding on to old facts, old presumptions. Like for example, the stock market yields 10% a year. But it’s really expensive now. How about the bond market? Well, yields are practically zero now. People haven’t done the simple arithmetic…

“I don’t know what’s going to happen, but I see that asset prices are high. This means that this is not the golden age for investing. We should not assume that it’s going to be as it always was…”

Shiller isn’t just reluctant to encourage investment in traditional stocks. He is also very reserved about the health of the US housing market, which has been a major pillar of the American economy since World War II. Yesterday we learned that existing US home sales fell 4.9% in January to the lowest level in 9 months.

Housing starts are also very low by historical standards, which Shiller blames on the long-term trend of “boomerang kids” – adult children who leave the household only to return a few years later to live with their parents. Young adults simply are not buying houses like their Baby Boomer parents did. As Shiller puts it:

We have had a downturn in housing starts since the data began in 1959. Americans loved housing, and it’s declining…

“The big turning point in the housing market was in 2012. That’s when QE3 was started, and that’s when mortgage rates hit an all-time record low. The 30-year was down to 3.35%. I think that had a huge psychological impact on the market. People thought, ‘This is a no-brainer. I should buy now.’ That mood has passed. This uptick we have seen in housing prices since 2012 may be temporary. I think home prices are at about the right level based on history. So maybe they won’t go anywhere in the near future… We’ve seen a big increase in home prices since 2012, and I wouldn’t bet on that continuing.”

While he doesn’t come out and critique the Federal Reserve directly, Shiller draws attention to the artificial stimulus created by the Fed’s monetary policy. Housing prices ticked up following the beginning of QE3, and it’s no coincidence that the market is struggling again now that QE3 has ended. It’s trends like this that lead investors like Peter Schiff into believing that the Fed will start a new round of QE in the next year.

Shiller is reserved in his public appearances, refusing to make hard predictions about the future of the economy and various market bubbles. However, his reservation is easy to see through – he does not have high expectations for the United States. His main piece of advice? Americans need to be saving more.

Conventionally, economists would tell savers to put their money into bonds. Shiller isn’t sure this is the right strategy either:

You have to think about long-term trends… Long-term interest rates have been declining since the 1980s. They were up in the double-digits and now they’re practically nothing… I think it’s a risky time to be investing in long-term fixed incomes.”

Analyst John Manfreda agrees and thinks that bonds are no longer the safe haven investors should acquire to protect against a major market bubble. He thinks the traditional correlation in which bonds rise while stocks fall no longer holds true:

But in 2011, that traditional correlation changed. In 2011, the bond market started to rise in correlation with the stock market. The bond market didn’t rise in an esclator like fashion such as the stock market, but it did rise in correlation with the stock market.

“This new correlation can be attributed to foreigners buying US assets, combined with the fact that the Federal Reserve was buying US treasuries, thus suppressing interest rates. Foreigners weren’t just buying US stocks, they have also bought US real estate as well. This form of flight capital and QE, has now made all US assets rise contemporaneously.”

Manfreda is just as reluctant as Shiller to predict an immediate stock market crash, but if there is one, he recommends gold as the best safe haven:

In my opinion, the one correlation that hasn’t changed, is the one between gold and bonds. Looking at the two charts below, I think they have always traded inversely of each other.”

From 2005 to 2007, gold rose in value, while the bond market remained relatively flat. During the ’08 crisis, bonds rose almost vertically, while the price of gold declined briefly. After the 08 crisis, the price of gold rose drastically, while the bond market declined. Lastly, in 2011, the bond market started to rise in value, while gold started its decline…

“One can see the price correlations have changed, this is likely due to global quantitative easing. If there is another crash, or foreigners loose confidence in the US markets, stocks and bonds will have a high a probability of declining in value at the same time, and unlike previous market panics, gold will be the new safe haven, and not bonds.”