Investors often make these two big mistakes when waiting for a market drop, Jeremy Siegel says

As U.S. markets climb to new highs and the Dow Jones industrial average comes within points of the 20,000 mark, investors may be making two mistakes if they are waiting for a decline before buying into equities.

Jeremy Siegel, professor of finance at the Wharton School of Business and author of the classic "Stocks for the Long Run," said in a recent interview that when investors anticipate a significant drop — say, 20 percent — they typically do not consider the fact that the stock market may in fact rise between current levels and a large decline.

"First of all, it goes up 30 percent in the meantime, so even then they'd be better off" just sticking with their holdings, he said Tuesday on CNBC's "Trading Nation."

On top of this, they may discount the fear they'll feel once the hoped-for decline actually transpires.

"Once it drops 20 percent, these guys are never going back in," Siegel said. "You know, 'Oh my god, look, the market's falling apart, I'm not going back in.'"

Instead of waiting for a correction or a crash, investors are better off just buying now, he said.

"I see the earnings recession, I think, is over. We're seeing a meaningful acceleration. Interest rates, yes, are going up, but still very low. Stocks still have huge edges over bonds, and other investments, in my opinion," he said.

"I think stocks represent really good long-term values now," Siegel concluded.


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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