Nobel Prize-winning economist Robert Shiller hasn't been the most optimistic voice on Wall Street, but he isn't writing off the bull market.

His chief reason: President Donald Trump's pro-business influence.

"There is a sort of optimism about the markets under Trump, and that's continuing. I don't see a reason for it about to change," the Yale professor said Tuesday on CNBC's "Trading Nation." "There's something about how the world is reacting to the president. Something about his self-confidence which is gradually lifting our spirits."

Shiller believes the momentum is so powerful, it's essentially propping up a bull market that is getting long in the tooth.

"We've seen an overpriced stock market. We've seen concerns about that for years now," he said.

Shiller acknowledged it's definitely possible the U.S. stock market could generate gains this year, but he warned the Trump effect "is not a very reliable thing." So, he said the best strategy is to diversify abroad in this environment.

"If you have been overexposed to the United States in your portfolio, this is a time to reconsider that," Shiller said. "Not to pull out, but to balance things ... Europe is cheaper than the U.S.."

Shiller's thoughts came as stocks were selling off in reaction to political turmoil in Italy. There's fear new elections in the euro zone's third-largest economy could put populist parties in power that will move to abandon the euro.

"We got news today [Tuesday] about Italy that is troubling," Shiller said — adding he was optimistic Italy would work out its problems and prevent a crisis.