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ZeroHedge: Another Bull Throws In The Towel: Siegel Says Stocks Will Be “Flattish” In 2019

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With US stocks struggling to post their third day of gains in the last two weeks, more professional investors are apparently buying into the view that the Shocktober market rout represented an “inflection point” for US stocks. And the latest long-time bull to throw in the towel is none other than Wharton Business School professor Jeremy Siegel, who said during an interview with CNBC on Monday that price action in US stocks would be “muted” next year, as P/E ratios decline, tax cuts become baked in yoy comparisons, and rising interest rates, amplify debt servicing costs.

Siegel is doubling down after warning on Sept. 25 that US stocks were on the verge of a “correction. Two weeks later, the Dow registered its worst drop since the February volpocalypse. While he doesn’t expect stocks to enter bear market territory, he expects returns to be “flattish” as tensions and uncertainty emanating from the US midterm elections and the US-China trade war also weigh on equities.

“There are challenges that we face now,” including rising interest rates, the midterm elections and U.S.-China trade tensions, the Wharton School finance professor said in a CNBC “Squawk Box” interview on Monday. “I’m looking flattish” for the coming year, he added.

Watch a clip from the interview below:

But true to his permabull reputation, Siegel said he still favors stocks over the next three to four years, believing that they will continue to outperform other asset classes. Furthermore, the dramatic selloff in emerging markets this year has created an “unbelievable” buying opportunity for investors willing to tolerate a little bit of risk.

“The sell off in emerging markets has presented unbelievable value” in the near term, Siegel said, though he admitted that his “fingers are bloodied” from trying to catch the falling knife.

Still “looking international may offer you more value in the near term than the US until we see some of these resolutions.”

Siegel is also skeptical of the Federal Reserve’s ability to engineer a “soft landing” for the economy and the market, adding that “when you look at charts [of market performance during Fed tightening]…there are not many soft landings.”

via zerohedge