Posted on 05/10/2020 8:56:11 AM PDT by fluorescence
The stock market’s coronavirus-driven bottom in late March is “definitely going to be the low” during the crisis, Wharton School professor Jeremy Siegel told CNBC on Friday.
In fact, Siegel said the massive monetary policy response from the Federal Reserve, along with additional progress on treatments and possible vaccines for Covid-19, could really boost stocks next year.
“I think 2021 could be a boom year. With the liquidity that the Fed is adding, unprecedented. It could be a really good year,” Siegel said on “Squawk Box.”
The S&P 500 touched its most recent bottom of 2,191 on March 23, but it has since rallied mightily on the back of robust action from the Fed and growing confidence among investors that economic restrictions meant to slow the spread of Covid-19 could be relaxed sooner than expected. As of Thursday’s close, the S&P 500 has gained more than 30% from its virus low.
Siegel, a longtime bull, said he believes the only way the stock market could retest the March 23 bottom is if there were a more severe coronavirus outbreak in the fall and full-scale lockdowns have to be implemented once again.
“I don’t think that’s going to happen. I think that’s a low-probability event,” he said, while acknowledging the “second wave” of the 1918 Spanish Flu was far more deadly than the initial outbreak.
...
However, the Wharton professor said he is more focused on data around the spread of the virus, rather than backward-looking economic reports, since it offers a forward-looking view on how the economy could recover.
“When I get up in the morning, actually I check all the virus data, the trends in the virus, the trends in the developments in therapeutics, in vaccines,” Siegel said. “That to me more informs what is going to happen in the future more than getting some historical report on how tragic this virus has affected our economy.”
He’s probably right - since the destruction of the dollar just about guarantees a Dow at 100,000 in the not-too-distant future.
But stocks that can and freeze food.
“When I get up in the morning, actually I check all the virus data, the trends in the virus, the trends in the developments in therapeutics, in vaccines,” Siegel said. “That to me more informs what is going to happen in the future more than getting some historical report on how tragic this virus has affected our economy.”
Absolutely spot on! That’s why all those reports asking “why is the market going up when the unemployment report was so awful” were so moronic.
I don’t know. Jeremy Siegel’s book “Stocks for the Long Run” was a huge and positive influence on my own investing after I read it when it first came out, but I wouldn’t wager my fortune on him being right in this case. I think a re-test of the March lows is very possible as it becomes clearer how much damage is being done to consumer spending (the lifeblood of the economy) by prolonged lockdowns being pushed by petty leftist dictators like Gavin Newsom.
I realize he’s forward looking but a wicked combo of record high unemployment and a wave of bankruptcies is heading our way. And hurricane season is almost upon us.
Hope I’m wrong but we may be in for a rough couple of months.
I put $10,000 into five stocks of well established companies selling for half what they were in January. Today that $10,000 is worth 13,000.
I think a re-test of the March lows is very possible as it becomes clearer how much damage is being done
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I agree. I think we’re looking at a “W” shaped recovery.
I’ll be buying on the re-test.
I thought he was older.
Then, I looked up Warren Buffet's age.
Buffet will be 90 in three months!
A lot of capital got pulled out on March and is waiting on the sideline...I think a retest would be tough when people see a drop and jump back in.
I’m thinking 15% pullback to around 21000
to get in.
Waiting for tech to drop Nasdaq seems overpriced now.
Been out since second week of crash. Re-entered Wednesday with mutual fund purchases, up over 4% in two trading days. Think their is more upside ahead.
Have started to put a small amount of money into TIPS mutual funds. Don't see inflation - yet, but as the recovery starts, it should pick up.
Have been trying to buy physical silver - but geesh, the spread between spot price and what I can buy it for are just so out of sync. Looks like it has been for awhile. But willing buyers are paying ~$6.50/oz over spot, so that's the way it is.
While I expect a re-test I tend to agree with you that the next leg down probably won’t be a steep as the first.
Good luck with your investments.
Not so fast.
The only one objective is Martin Armstrong.
He says he expects a retest, based on the computer.
I think we will know very soon.
“I think 2021 could be a boom year. With the liquidity that the Fed is adding, unprecedented.....
In other words “Don’t fight the Fed”
The latest version of the “Greenspan put” is in.
That's the real market price. The paper price is manipulated and meaningless.
I also bought stocks during this time.
Agreed.
He has somewhat of a notorious history.
What did you buy and how did you do?
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