Jeremy Siegel: "pandemic played right into the hands of the FAANG stocks”

Jeremy Siegel, professor of finance at Wharton, says the tech giants benefited from the closure of many physical businesses.

The S&P 500 is likely to hit new highs in the second half of this year, says Jeremy Siegel, the author of the influential book Stocks for the Long Run (in which he makes the case that investors should simply buy and hold shares, and not worry about ups and downs in the market). So long as there is not a severe second wave of coronavirus – which Siegel believes can be avoided even without a vaccine, so long as treatments become more effective – the “totally unprecedented” liquidity created by the Federal Reserve will keep powering the rally, he tells CNBC. That’s despite the gulf between the S&P 500 and the wider economy. “One of the unfortunate things about the lockdown is that we’ve actually improved  the prospects of …companies in the stockmarket” at the expense of smaller firms. 

In particular, “the pandemic played right into the hands of the FAANG stocks”, Siegel told ThinkAdvisor, speaking on a conference call for fund manager WisdomTree, where he is an adviser on investment strategy. The tech giants benefited from the closure of many physical businesses and so their shares, which were already beating the market before the crisis, have done much better than other sectors. Whether that persists in the next stage of the rally will depend on how rapidly the economy reopens, says Siegel. If the lockdown eases, the liquidity the Fed has created should flow into non-tech value stocks. “If the economy isn’t opening so fast, then the tech stocks will outperform.” 

Recommended

Will energy prices go down in 2023?
Personal finance

Will energy prices go down in 2023?

The Energy Price Guarantee will now be extended, but how much will your gas and electricity cost you in 2023?
9 Dec 2022
What is an annuity?
Glossary

What is an annuity?

Annuities are growing in popularity as rates increase. But what is an annuity, and how do you get one?
9 Dec 2022
National Grid gets ready to pay households to cut energy use this weekend
Personal finance

National Grid gets ready to pay households to cut energy use this weekend

The cold weather and unfavourable wind conditions have raised concerns about electricity supplies, prompting the National Grid to consider paying hous…
9 Dec 2022
Asda cuts fuel prices by 5.5p a litre
Personal finance

Asda cuts fuel prices by 5.5p a litre

Asda is now selling the cheapest fuel. We look at if fuel prices are now set to come down further and how to save on costs.
9 Dec 2022

Most Popular

Is it cheaper to leave the heating on low all day?
Personal finance

Is it cheaper to leave the heating on low all day?

The weather is getting colder and energy bills are rising, but is it really cheaper to leave the heating on low all day or should you only turn it on …
1 Dec 2022
Radiator vs electric heater – which is cheaper?
Personal finance

Radiator vs electric heater – which is cheaper?

We compare the costs, pros and cons of radiators and electric heaters and see which one will help keep your energy bill as low as possible.
28 Nov 2022
The pros and cons of smart meters – should you switch?
Personal finance

The pros and cons of smart meters – should you switch?

A smart meter can help you keep tabs on your energy usage, but is it better than a regular meter? We take a look at smart meters vs regular meters.
2 Dec 2022