Perma bull Jeremy Siegle, the Wharton School of Finance professor, appears to be getting some cold feet when it comes to his prediction earlier this summer about the DJIA closing out the year at 18,000.
It's amazing what a little volatility will do for one's courage. But this isn't the first time Siegle has had to back off his bullishness.
Seigle actually came to notice in 1994 with his then best seller, Stocks for the Long Run, and he rode that tide until early 2000 when during a Business Week interview he was asked about the future of the market and he responded:
"Seven percent per year [average] real returns on stocks is what I find over nearly two centuries. I don't see persuasive reasons why it should be any different from that over the intermediate run. In the short run, it could be almost anything."
History records what happened soon after that.
Last July he had this to say after he suggested the market might be over-valued at 20 or 21,000
"I would say my biggest worry would be on the inflation front. If we start seeing some supply constraints, if the low unemployment brings wage increases that are not matched by productivity increases, oil stays high and gets higher, that'll be a problem," he said. Much higher gasoline prices, too, "would certainly be a problem."
The above was in July. On August 19th he said this:
Right now, the market is selling at 16.5 times 2014 earnings, Siegel noted. To get Dow 18,000, it would need to sell at 17.5 times earnings, "a very reasonable multiple given the interest rates." On top of that, in 2015, earnings are expected to increase another 6 percent to 10 percent.
He's also not too concerned about the uncertainties around the globe, like the conflicts in Ukraine and Gaza, affecting his thesis because the market has learned to live with them.
"We live in a world of uncertainty and bull markets actually climb the wall of worry," Siegel said. "When we see nothing in the future that can worry us at all, I'll get worried and I'll probably tell people to sell stocks."
September 16th the following:
Standing by his prediction of 18,000 on the Dow Jones Industrial Average by year end, Siegel again made his case for why the bull market still has legs. He sees second half economic growth of 3 to 4 percent, S&P 500 earnings near $120, and the start of Fed rate hikes in the spring or summer of 2015.
A little over one month later on October 24th, he told CNBC:
It looks like the stock market hit its recent bottom last week, long time stock bull Jeremy Siegel told CNBC on Friday. But the Wharton School professor of finance said his prediction for the Dow to reach 18,000 by year end is now only 50-50.
Perhaps I've been sticking my neck out too much," Siegel joked in a "Squawk Box" interview, but added that 18,000 still appears more likely than it did last week. He also pointed to the historic strength for stocks in the months of November and December.
There are bulls and there are bears and then there is you.
Siegle is a professional investor connected to some big, popular funds. In the face of all his bullishness for months, if a little nine percent correction jangles his nerves so much, why should ordinary investors pay him and his views much heed?
No comments:
Post a Comment