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

The best 0% balance-transfer credit cards
Credit cards

The best 0% balance-transfer credit cards

These 0% balance transfer credit cards offer some of the best deals on the market today.
9 Jun 2023
Best savings accounts – June 2023
Savings

Best savings accounts – June 2023

Interest rates have been creeping up - we look at the best savings accounts on the market right now.
9 Jun 2023
Share tips of the week – 9 June
Investments

Share tips of the week – 9 June

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
9 Jun 2023
The best one-year fixed savings accounts - June 2023
Savings

The best one-year fixed savings accounts - June 2023

You can now earn over 5% on 1 year fixed savings accounts - the best rate seen in 14 years. We have all the best deals available now.
9 Jun 2023

Most Popular

Saving vs investing: which is better to help you make more money?
Personal finance

Saving vs investing: which is better to help you make more money?

Saving has become a more attractive option with interest rates hitting the highest levels seen in years, but if you’re prepared to take some risk inve…
7 Jun 2023
Best debit and credit cards to use while travelling abroad
Personal finance

Best debit and credit cards to use while travelling abroad

If you’re going on holiday or travel abroad regularly, it’s worth knowing what the best card is to avoid hefty fees. We weigh up the charges and any p…
6 Jun 2023
Why is the petrol price falling, and will it rise again?
Oil

Why is the petrol price falling, and will it rise again?

Petrol prices are easing, but the broader picture is not entirely certain. Here’s what you need to know about petrol prices.
5 Jun 2023