Stocks are still one of the best buys around with record highs possible for the next couple of years, Wharton finance professor Jeremy Siegel said Monday.
“They’re fairly cheap on an absolute basis. They’re extraordinarily on a relative basis, about the most relative cheapness I’ve seen stocks probably since the 1950s,” he said on “The Kudlow Report.”
Siegel predicted the Dow Jones Industrial Average has a 50 percent chance of hitting 17,000 by the end of 2013 and a 75 percent chance it’ll hit 15,000.
“In 2000, we were starting at a 30 price-earnings ratio. That was the most that the stock market has ever been in the world,” he said. “It’s not surprising the next decade is going to be bad when you start at a 30.
“When you start at a 13 price-earnings ratio, get back in history, the future is much, much brighter. We’ve never had bad stock returns over the next three, five, 10 years when you start with a 13 P/E ratio, and that’s the world of difference.”
The former adviser to 2008 Republican presidential hopeful Sen. John McCain of Arizona has long been bullish on the market. Making headlines for predicting Dow 15,000, Siegel recently upped his forecast another 2,000 pointsfor the end of next year.
Asked by host Larry Kudlow whether corporate profits would play a significant role in stock market returns, Siegel said they were not necessary.