Stocks are primed for above average returns this decade, after suffering the worst 10 years in history from 2000 through 2009, says investment guru Jeremy Siegel.
“I believe the next 10 years will bring returns in equities at or above their long-term normal of 6 percent to 7 percent, after inflation,” the University of Pennsylvania professor told Fortune magazine.
“Returns on a diversified global portfolio of equities will be at least that much.”
U.S. stocks produced an average annual return of negative 0.5 percent in the last decade.
Siegel stresses the emphasis on global stocks.
“Over half the world's equity capital is now outside the U.S., and that fraction is growing,” he said.
For companies in the Standard & Poor’s 500 Index, foreign sales account for 40 to 50 percent of profit and revenue.
“And that fraction will be rising,” Siegel said.
“You have to be internationally diversified, in both emerging and developed markets. There's no question emerging markets will grow faster than the developed.”
But be careful of buying overvalued shares, Siegel says.
“Go for the firms that recognize where the growth is going to be but are still reasonably priced. They could be in the U.S., Germany or anywhere.”
A recent Bloomberg survey shows that many investors share Siegel’s bullishness.
Bloomberg’s sentiment reading for the S&P 500 Index has climbed to 54.37, the highest since Bloomberg began the poll in 2007.
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