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.

By MSN Money Partner Sep 2, 2014 2:27PM
Credit: © Matt Stroshane/Bloomberg via Getty Images
Caption: Jeremy Siegel, the Russell E. Palmer Professor of Finance at the Wharton SchoolBy Matthew J. Belvedere, CNBC

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.


More from CNBC

44Comments
Sep 2, 2014 3:16PM
avatar
Fair values??? In this grossly GROSSLY over sold debt driven cluseterf***?? Yeeeeeah, spoken like a a true shill.
Sep 2, 2014 4:30PM
avatar

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.

avatar
OMG P/E ratio of an ok company should be 10 and if you plan on making money it should be 7

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

Sep 2, 2014 6:19PM
avatar
Assigning an arbitrary number of 18 to a "fair" market value is absurd. There's no historical context to justify that number and it ignores interest rate effects on demand yields.
Sep 3, 2014 8:04AM
avatar
An amusing quote from VL, (Veteran Lunatic) "I haven't bought a stock in a long time after it hit my target price of BROKE"...more proof that he is just a bitter, failed investor that got nervous, sold at the wrong time and lost his shirt & shoes!  Now he spends all day, everyday complaining about those who are smart enough to invest intelligently and successfully.  Don’t waste too much of your time trying to debate with this mental defect, he’ll remain lost regardless of what you write back to him.  Too bad VL never learned to profit from the very predictable and cyclical greed of others.  It’s reflective of him having never completed any advanced degree at any level of higher education.   Now his ignorance has sentenced him to work until death, rather then enjoying the delicious fruits of early retirement.  Nobody is going to throw him a parade for his "hard work"...washing machines work very hard too!  VL's tones of resentment towards successful investors that were smart enough to make their money work for them, rather than working way too hard for their money...always makes me laugh.  He seems to hate successful investors, yet he spends his life posting bitterness and resentment all over MSN investment articles…the ones meant for actual investors!  Your bitterness and jealously are all too obvious VL.
Sep 3, 2014 4:38AM
avatar
There' s something i don't understand. Why we are talking about FAIR VALUE of a market and a correction of a market. In the market there are a lot of undervalued company with a lot of rooms for growth and a lot of overvalued stock (TSLA, AMZN, FB, NFLX etc...).
Sep 2, 2014 3:04PM
avatar
who knows what's the chocking point of the easy money lots of money herd. who cares.
Sep 2, 2014 5:53PM
avatar
Keep in mind this is a Global Economy, with that in mind, here are just a few FACTS.

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."


Sep 2, 2014 4:29PM
avatar
The Bull lives in the White House and the Bear is coming home\
No "Bull" can match the coming "Bear"

Sep 2, 2014 4:51PM
avatar
Poster states, "  Personally, if a Professor from the Wharton School of Finance is opining on the Stock Market, I give a lot of credence to his thoughts.  I tire rather quickly of the constant negativism of the regular posters here.  Hint, Hint."

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.
Sep 2, 2014 6:17PM
avatar
Bull market isn't over because the Fed is still pumping billion of dollars fiat money into the system.  When that stops, the market will crash.  I wouldn't even have one dollar in the stock market.
Sep 2, 2014 4:28PM
avatar

All of you people are idiots, posting your own theories...LMAO


WOW just wow

Sep 3, 2014 7:31AM
avatar
Russia and Ukraine suddenly make peace. The media decries-- it's long term. Markets go crazy. The man behind that curtain is incredibly strategically smart and cunning. Will YOU be buying today? Are the stocks YOU want to buy- overpriced?
Toll Brothers is UP. It's a McMansion Builder and FACTS established by real data says home sales are plummeting. Yesterday we saw Twitter, Tesla and Amazon rise but none of them are making sales, income or are profitable.
Keep that Kool Aid flowing... meanwhile, there is now less than 2% of the world's monies flowing outside it's markets- which are fully dysfunctional to society. This is truly unsustainable in all ways possible.
Sep 2, 2014 5:05PM
avatar
I like this Professor a lot but he is giving a conservative estimate to the media so he doesn't look bad. I think we are heading to Dow 20,000 because ultimately ISIS or ISIL will be defeated by large build-up of American- and German-sold weaponry to the area and Russia will come back to the table for a way to exit the Ukraine issue before winter. North Africa will be the new Canada as oil-gas-mineral rich properties are exploited and sent back through the chunnels for sale in Northern Europe. We will then return to pumping more money into Latin America to reduce the cartels and our GDP with the south will grow. This is the dawn of new technology moving humanity onto the next level. The 49% living in a trailer who supported Romney aren't going to make it without an education so I expect more Federal oversight of state education agendas.We don't need anymore bible whackos and trailer parks, we need technicians.
Sep 2, 2014 3:00PM
avatar
The United States is the best at printing Fake Money. When that House of Cards tumbles, Pump Tarts like Siegel will be once and for all, become totally exposed. This is guy is in the business of pumping up Markets regardless of the actual facts on the Ground. This fraud will eventually get a lot of Folks hurt once this massively Front Loaded Ponzi Type Scheme falls apart. The Global FEDS are already tapped out. When the next Global Recession happens, just what in the World can they possible do for an encore. Anyone?
Sep 2, 2014 3:46PM
avatar
Well, by the indicators I use, it's a healing bear market, hopefully to back in bull mode in the next month or so. What indicators have you folks been using anyway?
Sep 2, 2014 4:42PM
avatar

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.

Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

125
125 rated 1
267
267 rated 2
455
455 rated 3
612
612 rated 4
682
682 rated 5
695
695 rated 6
632
632 rated 7
472
472 rated 8
279
279 rated 9
147
147 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
VZVERIZON COMMUNICATIONS9
TAT&T Inc9
CTLCENTURYLINK Inc8
EXCEXELON CORPORATION8
AAPLAPPLE Inc10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.