Yale economist Robert Shiller, the creator of the S&P Case-Shiller Index and author of "The Subprime Solution" and "Irrational Exuberance," said that investors should brave the current "economic chaos" and buy stocks and real estate.

"I'm less pessimistic than I was a few months ago," Shiller said of U.S. markets in an interview in New York with Bloomberg.com. "The price-earnings ratio is about average, and by that you might say it sounds like one should be in the market and have a balanced portfolio that has a good share of stocks."

"Having a good fraction of your portfolio in stocks, not zero, is probably sensible now," he said. "People should be in real estate as well because that has a chance of rebounding. It has to be about diversification, about spreading risks."

Shiller's main point seems to be that investors shouldn't be too focused on one asset class, which is what tended to happen when homeowners were putting so much of their income into their homes, instead of splitting it up between savings, the stock market, real estate, and other asset classes.

Shiller famously sold his house and started renting after being laughed off CNBC and other media outlets for his prediction that the housing bubble would soon burst.

Recent Real Estate Features

• Shortest Days on Market: Where Homes Are Selling ... Fast
• Homes of the Future? Award Winning Homes