market folly

Wharton finance professor Jeremy Siegel last month sat down for an interview in the Knowledge @ Wharton newsletter. The talk delves into his view on the markets for 2010 and he believes it will be a good year for equities and a bad year for bonds. He also believes interest rates will go up. Once investors get over their initial fear and realize that such an increase would mean the economy is recovering, Siegel thinks we could see 10% equity returns.

His pessimism on bonds is due to risk premium dissipating, interest rates rising (causing bonds to lose value) and he does not like any long-term bonds in 2010. However, he did like corporate bonds and 'risky corporates' a little bit as well. This is not the first time we've seen this overall stance as Bank of America was out saying to overweight stocks and underweight bonds.

Below you'll find Siegel's thoughts and his market outlook for 2010:



You can download the .pdf here.

Siegel also recently sat down with Bloomberg to talk about the recent pullback in the markets. Here's the video:



Siegel definitely feels stocks are the superior choice to bonds for this year. With that in mind, head to the list of top stocks held by hedge funds for a few ideas (or crowded trades if you look at it that way).
For more outlook and insight regarding the markets for this year, head to the ten investment themes for 2010.