Bull market isn't over yet, but . . .
Jeremy Siegel is still optimistic about stocks, saying the US economy is the best in the world. Still, he says, we're getting closer to fair values.
Wharton School Professor of Finance Jeremy Siegel (pictured) has been bullish on the stock market for years now and he's not ready to change his mind yet.
But he introduced a caveat Tuesday on CNBC: "We are creeping closer to fair market value [for stocks], which I think is approximately 18 times S&P earnings."
"We're not over with this bull market. I'm sticking with my projection [for the Dow Jones Industrial Average ($INDU)] of 18,000 by year end," he said in a "Squawk Box" interview. "Our economy is the best of the three major engines in the world, and that's why I have faith in U.S. stocks."
Siegel pointed to Friday's employment report for August -- predicting additions "probably north" of 200,000 in nonfarm jobs. "This looks good for earnings. We're going to get about $120 on the S&P [earnings]. I like that."
With the Standard & Poor's 500 Index ($INX) around the 2,000 level, the market was selling at 16.5 times 2014 earnings. The 10-year price-to-earnings ratio average is around 14 times.
The S&P closed out August with its 32nd record of the year. September has traditionally been one of the worst months for stocks, but not in the last two years.
Last week, two market watchers -- technical analyst Abigail Doolittle and Prudent Bear Fund's David Tice -- warned on CNBC of possible declines of up to 60 percent on eventual fallout from the Federal Reserve's easy money policies.
Siegel said Tuesday he doesn't see interest rates moving much higher anytime soon, even if the Fed does start raising short-term rates in mid-2015. But he did say the market could see a "little ripple" if the Fed moves sooner than expected. "But my goodness, we've lived long enough to see Treasury rates at 5, 6, 7, 8 percent. I'm not scared of 3 percent. I'm not scared of 3.5 percent."
The 10 year yield could go up to the 3-to-3.5 percent range, he continued, but only if the economy "really booms at 3 percent or 4 percent and that means better earnings for corporations."
Currently, the 10-year yield trading around 2.39 percent.
In February 2012, Siegel achieved his legendary bull status when Barron's splashed the headline "Dow 15,000." It was a prediction for the blue-chip average two years from then, based on Siegel's work.
The Wharton professor has not wavered since.
Last month, Siegel defended his rosy views -- saying he's not biased toward being bullish. He pointed out he was bearish on stocks in 2000, the market top before the 2007 peak.
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It seems there's so much money looking for a home. That's driving values. Europe
issues a 0 interest bond, Europe comes to America. china is shaking down it's
billionaires, they come to America. No interest on CD's, bond rates are to low, need
to invest in hard assets, RE and stocks.
the S&P is at 18 ??? it is almost three times over priced
And this guy says it can go higher??? We are in burst area now.
Things are not going to be looking up next year this time
Italy, the third-largest eurozone economy after the last quarter is now in recession.
Brazil's economy just slipped into a recession.
Japan's GDP Plunge/contracted at an annualized -6.8 percent.
Puerto Rico is virtually bankrupt with large exodus of it's population.
This is the latest on the Euro-zone front.
Quantitative easing hopefuls may be disappointed as Draghi plays for time September 2, 2014 6:03 AM ET By Eva Taylor
"The ECB is also waiting to see the impact of its new four-year loan program. Under the plan announced in June, banks can take up to 400 billion euros in September and December, and even more next year if they keep lending into the real economy.
The ECB is already "moving fast forward" with preparations to buy securitized loans, Draghi said in Jackson Hole, and economists expect further details on a possible asset-backed securities (ABS) program on Thursday.
"QE is now largely unavoidable because inflation continues to persistently undershoot," said Citigroup economist Guillaume Menuet. He expects the ECB to announce such plans in December."
Folks that don't want to hear about reality always defer to those that don't and or can't actually see it. I get it, so many folks have been destroyed in the past and now after a nice Recovery, they don't want to go through that madness of massive losses again. However, since these folks are ignoring what and why, that's exactly what will happen.
This is a posting board, if you only want to hear the PIE in the Sky take of a given article, don't bother to read the posts below. If you tire of hearing others opinions then why are you HERE. HINT, Hint. What some folks consider negativism, others considered just FACING Cold hard reality. Bulls make money, Bears make Money, but PIGS always get slaughtered. Always.
All of you people are idiots, posting your own theories...LMAO
WOW just wow
MERE MORTALS!! You cannot stop this Obama Bull Market !!! Stay LONG.
President Obama and his MIT-trained turn-around team have tripled the stock market in less than 8 years with zero help from the Tea Party-controlled GOP Congress. This BULL will only die when Obama leaves office and the next guy either diverts from the Centrist-Progressive path or God forbid another ignorant Tea Party Republican gets control of the White House and Congress and signals us into another Holy War over Big Oil that we no longer need. God Bless Our President and America rocks! This market is going much much higher. Stay LONG in S&P 500-based stocks like ticker SCHD and hedge with ticker BX because America is coming back strong. After 30+ years of Republican failed government, most analysts like this one have never seen true job creation that didn't involve blowing up the federal government jobs and military recruiting before. If you believe America has only begun to rock on, vote YES. Tea Party brainwashed vote NO.
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An interest rate tease in The Wall Street Journal sends the market into an optimistic tizzy -- but one that doesn't end quite at the top.
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