Fingers Crossed!

Some potentially good news (or at least opinion) from Jeremy Siegel, one of the most credible of financial academics, in an interview from Advisor Perspective (one of the few web news letters that I read regularly) titled “Jeremy Siegel on Why Stocks are ‘Extremely Attractive”. Here’s an excerpt:

“The market is still extremely attractive and, in fact, more attractive given that interest rates are much lower.

In a way, with the stock market really doing nothing and 10-year Treasury rate going from just under 3% to under 2%, we have a more attractive equity market relative to bonds.

The equity premium today, which is the difference in expected return on stocks and bonds, is more than twice its historical average. The historical average has been 3% to 4%, and right now the expected return on stocks after inflation is around 8% given current P/E ratios. For bonds, real returns are about zero for the 10-year.

You’ve got a very, very large gap between bonds and stocks.”

I sure hope Professor Siegel is correct and I wish one and all a very Happy and Healthy New Year.

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