It’s no secret that Wharton School finance professor Jeremy Siegel tends to be a market bull. After all, he may be most famous for penning a classic of popular investment literature, “Stocks for the Long Run.”
But after a 12 percent rally in the past six months, and nearly a tripling of the S&P 500 over the past eight years, it is striking to see how just optimistic Siegel still is about the market .
“I actually think we have a Goldilocks situation going on now,” he said Thursday on CNBC’s “Trading Nation.” “We have everything moving in tandem.”
For starters, earnings have looked good, Siegel pointed out, adding: “But much more important than that is the maintained or upward guidance for second, third and fourth quarter — something we’ve not had for years.”
In prior years, he said, “it’s been stunning how year estimates have come way down by the time we get to December. Now, anything can happen. We’re only in April — but it’s the first time that I have seen forward guidance maintained or increased since we turned around from the great crisis back in 2009.”
That is to say, optimistic estimates of earnings for the rest of 2017 are being maintained. According to data from FactSet, income growth for 2017 is currently predicted at 9.9 percent, just a touch below the 10.8 percent estimate from the end of 2016.
Meanwhile, with about half of S&P 500 companies having reported earnings, investors are looking at profit growth of 11.1 percent, with the bulk of those gains coming from the energy and financial sectors.
The good earnings news comes even as economic growth remains relatively slow. That means inflationary pressures shouldn’t force the Federal Reserve to speedily raise rates — hence the not-too-hot, not-too-cold Goldilocks environment.
Still, Siegel is not above sowing self-deprecating cushions of doubt.
The fact that everything looks so good “I guess should make me worried, because we know that that doesn’t always persist,” he quipped.