The stock market has been on a tear lately, with the Dow Jones Industrial Average hitting another all-time high of 14,706.52 on Tuesday, but the bullish Jeremy Siegel argued that the Dow could see 18,000 by the end of next year.
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To Siegel, professor of finance at the University of Pennsylvania 's Wharton School and author of "Stocks for the Long Run," there are two reasons the market could keep pushing up.
To start, Siegel noted that stocks are trading at historically cheap multiples. Equities are so inexpensive that no asset class is more attractive, he said. Take Treasury bonds. With the yield on bonds so low, he thinks you can easily pay 18 to 20 times earnings and not be overpriced on stocks.
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"Given what I see going on in the rest of the world and all this liquidity coming in, people are going to look to stocks as that hedge with earnings power and dividends, which none of those other asset classes have," Siegel said on CNBC's "Futures Now."
He added that stocks will likely stay strong as long as the Federal Reserve maintains its policies on bond purchases and record-low interest rates. In September, the Fed launched a third round of quantitative easing, in which it has bought $40 billion of mortgage-backed securities per month, primarily in mortgage-backed bonds.
