Tags: Jeremy | Siegel | Bears | wrong | Stocks | Rise

Jeremy Siegel: Bears Will Eat Crow, Stocks Will Rise

By    |   Monday, 08 Nov 2010 10:32 AM

Many experts are bearish on stocks now, just as they were in 1979, says stock guru Jeremy Siegel, a professor at the University of Pennsylvania’s Wharton School.

And just as in 1979, they will be proved wrong, he says.

Among the naysayers is Royal Bank of Scotland, which pronounced in June that the world economy was headed for collapse, which would “destroy the world’s cult of equity,” Siegel notes in Kiplinger’s Personal Finance.

And Pimco chiefs Bill Gross and Mohamed El-Erian say the economy has entered a “new normal,” which will entail meager stock returns.

“But all these doomsayers exhibit the same shortsightedness that [bears] did three decades earlier,” Siegel writes.

So what’s the evidence for Siegel’s view? First, stock returns far surpassed those for bonds in 16 countries over the past century. Second, surging productivity growth will spark a bigger economic expansion than the Pimco heads believe, he says.

“Finally, predictions warning that the wave of baby boomers entering retirement will lead to the liquidation of stocks are similarly flawed,” Siegel writes.

“History shows that pessimists, no matter how fashionable, have always been wrong about long-term prospects for the U.S. economy and the stock market. This time is no different.”

Still, some experts remain pessimistic. “It looks like (bullish) expectations have gotten ahead of themselves,” Jeffrey Coons, president of Manning & Napier Advisors, tells Bloomberg.

“The Fed announcement, the election results — it doesn’t really change the fundamentals.”

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Many experts are bearish on stocks now, just as they were in 1979, says stock guru Jeremy Siegel, a professor at the University of Pennsylvania s Wharton School. And just as in 1979, they will be proved wrong, he says. Among the naysayers is Royal Bank of Scotland, which...
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Monday, 08 Nov 2010 10:32 AM
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