Wharton finance professor emeritus Jeremy Siegel discusses investment strategies from his book 'Stocks for the Long Run.' Topics include interest rates, Black Swan events, ESG investing, market bubbles, and strategies for long-term equity investing.
Stock returns show stability over years despite crises, emphasizing long-term investment strategies.
Managing expectations and making informed decisions are key in understanding stock market mean reversion and volatility.
Deep dives
Impacts of Black Swan Events on Investing
Black swan events like the pandemic have short-term effects but minimal long-term impact on stock returns, showing stability over years despite crises. Stock returns revert to a long-term trendline, emphasizing the importance of long-term strategies in investment portfolios. Understanding this mean reversion and the volatility in stocks helps investors manage their expectations and make informed decisions.
Role of Federal Reserve and ESG Investing in Finances
The Federal Reserve's actions affect short-term market dynamics, but long-term investment decisions are more crucial than reacting to immediate changes. ESG investing, while gaining attention, requires careful portfolio balancing for risk-return trade-offs compared to traditional index investments. Climate risk considerations and personal beliefs can influence investment choices, highlighting the challenge of aligning financial success with ethical goals.
International Investing and Changing Market Dynamics
International investing and value strategies have faced challenges compared to US-based investments like the S&P 500, which have outperformed significantly. Market bubbles, such as those seen in meme stocks, pose risks similar to past manias but on a smaller scale. Strategies like investing in growth stocks over value stocks have shifted over the years, requiring a mix of long-term principles and adaptability to changing market trends.
Wharton finance professor emeritus Jeremy Siegel’s bestselling book, Stocks for the Long Run, was first released in 1994 and is now in its sixth edition. Siegel talks about what has changed in investment strategies, and what remains the same. This Ripple Effect podcast episode is part of a series called “Meet the Authors."