Jeremy Siegel has been a market commentator for a long time.
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Jeremy Siegel, a finance professor at Wharton, says that US stocks will rise in the year 2022.
The Fed is likely to raise rates three times this year, as sky-high inflation has spurred the central back to action.
Siegel thinks the Fed is behind the curve on inflation and will have to raise interest rates more than expected.
He said he would not be surprised to see the short-term interest rate go to 2% by the end of the year.
Siegel said that even a sharp rise in borrowing costs will not stop US stocks from marching higher this year. He predicted that the stock market will have an up year, but not as much as 2021.
The S&P 500 index rallied more than 25% in 2021, as the Fed's ultra-low interest rates and huge bond purchases juiced the markets. The coronaviruses vaccines added to the optimism.
Some analysts think that the outlook for the stock market will be different in 2022, due to factors such as coronaviruses and the US elections.
Siegel said that inflation and the Fed's plans to hike interest rates will cause some volatility in the stock market.
He said that the only way to beat inflation is by investing in equities, because bond yields are historically low and the real value of cash is being eroded.
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Siegel said that "that old saying that we all know: TINA, there is no alternative, in an inflationary environment" will lead to a rise in stocks.
He noted that investors will have to be more careful about which stocks to buy.
The Wharton professor said that stocks with good dividends are likely to do well.
He said that high-flying tech stocks that are yet to yield much in the way of profit will likely suffer, as higher bond yields and inflation make them look less attractive.
Siegel doesn't think the US stock market looks overvalued when Apple is removed.
He thinks the stock market is a reasonable one, despite the fact that earnings ratios are above the historical average.
Business Insider has an original article.
