Wharton Professor Jeremy Siegel Says 'Stocks Are The Place To Be' Amid Rising Geopolitical Risks

Despite rising geopolitical risks and inflation, Jeremy Siegel, a professor at the Wharton School, encourages investors to favor stocks over bonds.

According to a report by Business Insider, Siegel feels that the economic growth remains robust, partially due to the increased adoption of artificial intelligence.

Siegel noted that the United States’ GDP growth in 2023 is nearly double that of 2022, even though job gains this year are half of last year’s. This trend underscores the current environment of productivity growth.

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“The promise of AI is real. Our growth is driven by productivity… productivity-driven growth brings inflation down, it’s good for earnings, but it does drive yields up. I want to be in stocks and not bonds,” Siegel stated.

Siegel also argued that stocks are a superior investment in times of large deficits and higher future inflation. He considers geopolitical risks amid conflicts in Israel-Hamas, Russia-Ukraine, and China-Taiwan as reasons to invest in stocks rather than retreat.

He believes that the S&P 500’s 8% drop since July is mainly due to higher interest rates. However, he sees these rates, driven by stronger-than-expected economic growth, as a positive sign for future corporate earnings.

Siegel said, “In the long picture, these real yields although certainly higher than they’ve been in the last 10 to 12 years, are not high in terms of history. And if we have real growth that’s the source of these higher yields, I don’t think that’s a negative for stocks.”

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