An Optimist Jeremy Siegel

It isn’t every day that you get your opinion validated by the likes of Jeremy Siegel, the “Wharton wizard,” market commentator and senior investment strategy advisor for Wisdomtree ETFs. Siegel delivered a very bullish talk at Sourcemedia’s ETF 360 conference in New York. “Stocks have never been so much cheaper relative to bonds,” he said. “The ‘New Normal’ pushed by PIMCO’s Bill Gross is not new and it’s not normal.” That’s because that kind of negative view is based on Keynesian thinking, which is a poor predictor. For example, looking at the aggregated economic data failed to predict the post World War II boom.

Siegel displayed numerous charts showing that the long-term trend for stocks is upward. From January 1802 to June 2010, stocks have had a real return of 6.6%, he said, compared with 3.6% for bonds, 2.8% for Treasuries and 0.6 for gold. And over a 20-year holding period, an investor would have fewer losses with stocks than with bonds. This doesn’t just apply to U.S. stocks, but international equities as well. “In every country in the world over time, stocks beat bonds, showing that the equity premium is extremely robust,” he said.

Source: On Wall Street

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