Wharton's Jeremy Siegel: Stocks poised to rise
Investors feel so bad, stock prices are likely to rebound, Wharton finance prof Jeremy Siegel told Bloomberg TV this morning. Siegel's sunny data charts, showing stocks tend to outperform bonds, helped spark the stock bubble of the 1990s.
"The more bearish (that) investors are and newsletters are, the more likely we are to hit a bottom," finance professor Jeremy Siegel, the self-described "Wizard of Wharton", told Bloomberg TV in an interview this morning. Citing data from Investors Intelligence, which ranks investment newsletter "buy" and "sell" recommendations, "we hit an 18-year low", which means "everyone out there is down on the market. Is a bear. Sold out."
Investment advisors' sentiment cratered with stock prices in July, rose a bit, and has slumped to worse than it was. In fact, last time investors felt nearly this blue, "we were in October 2002, when we just finished a 50 percent bear market." Stocks rose from there, until the Bush administration's invasion of Iraq killed that rally, Siegel said.
What's next? "If we can rally from these levels, I would say that confidence that July was a bottom will grow dramatically," Siegel said. If stocks go up, stock investors will feel better...
Siegel's sunny data charts, showing stocks tend to outperform bonds, replaced Ibbotson charts as promo materials in broker offices, helped spark the stock bubble of the 1990s, and boosted Siegel's book sales (Stocks for the Long Run, four editions), newsletters, seminars, and other ventures.
Of course, stocks do outperform bonds, except when they don't, for example, from the late 1960s to the early 1980s, and since 2000.
