Wharton professor Jeremy Siegel dismissed the idea that U.S. stocks are overvalued, saying they are actually “undervalued.”
Billionaire investors Jeremy Grantham, Bill Gross, and Jeffrey Gundlach recently appeared to value stocks.
“Despite a mild recession, these are very good long-term values,” Siegel said, referring to current levels in stocks.
A growing number of Wall Street experts have recently warned that US stocks look too expensive.
Billionaire investors Bill Gross And Jeremy Grantham Stocks are overvalued, he said, with the latter predicting the S&P 500 index could crash by 50%. Jeffrey Gundlach, CEO of Dublin Capital, and JPMorgan Strategists have made similar comments in recent weeks.
But not everyone is buying it.
Wharton finance professor and marketing guru Jeremy Siegel suggests the opposite may be the case.
U.S. stocks are still offering “great long-term value” in terms of their earnings yield — a key measure of returns — coming in at around 6 percent, which is better than the inflation-adjusted 2.4 percent offered by the bond market. The author of “Long Run Stocks” wrote in it Weekly wisdom tree comment.
The so-called equity risk premium – the excess return on equity over government bond yields – has fallen to a multi-year low of around 3%, he said, adding that stocks are still too expensive.
“Great Long-Term Values”
“We have a market trading at 17.5 times next year’s earnings estimates, and tech stocks are trading three to four points lower. Despite a mild recession, these are great long-term values. Yields are over 6%, which equates to future real earnings.” ” Ciel wrote.
“The shares still have very good long-term returns and a 3% equity premium, although it is lower than in the last decade, it does not mean that the shares are overvalued. They are now undervalued in my opinion,” he said.
Some experts point to the stock market’s historic highs relative to bonds and the decline in equity risk premiums, arguing that stocks are too expensive and a sell-off may be looming.
In recent months, the S&P 500 has reached levels last seen at the height of the dot-com boom, according to an index that tracks the U.S. corporate bond market, according to data from global analytics platform Coiffine.
The measure finally showed this peak in the spring of 2000 – and after that a Stocks’ Multi-Year Meltdown That Saw the S&P 500 Crash 50% From March 2000 to October 2002
“The equity risk premium hit its all-time high in 1927. On the 6 occasions this has happened, the markets have seen a major correction and recession/depression – 1929, 1969, 99/00, 07, 18/19, now,” research firm MacroEdge said in a report. Latest post by X.
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