As the Dow continues to climb amidst conjecture by some around a possible market decline, Wharton professor Jeremy Siegel thinks investors shouldn’t avoid buying stocks, according to a CNBC article posted last week.
The author of Stocks for the Long Run says 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.” Even if they avoid buying, he says, they would be better off just sticking with current holdings.
A second mistake investors could make, according to Siegel, is discounting the fear they’ll experience if a decline actually occurs. “Once it drops 20 percent, these guys are never going back in,” the professor argues. Instead, he says, investors are better served to buy now instead of waiting for a “correction or a crash.”
Siegel asserts his belief that the earnings recession is over and, “we’re seeing a meaningful acceleration. Interest rates, yes, are going up, but are still very low. Stocks still have huge edges over bonds and other investments, in my opinion.”