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Thursday, June 4, 2009
Is it a good time to buy stocks?

The WSJ blog article discusses Jeremy Siegel's (finance professor at University of Pennsylvania’s Wharton School, and author of The Stocks for the Long Run) recent interview at NPR. As per the blog article, according to Jeremy Siegel, this is a good time to buy stocks.
I’m virtually sure that it’s not going to be a long wait. And the reason is we’re no longer at high points in the market. In March, we were down more than 50 percent. And I looked all the way back last hundred years. Once you’re down 50 percent, your prospects are very good....
....
Even in December of 1930, where you were 50 percent down from that all-time high in 1929, your five-year return was more than seven percent after inflation. The world looks different once you’re down as much as we have been down.
I have read Siegel's Stock for the Long Run book and felt it was very good book. Compared to their October 2007 highs, stock market is lower, however, it still pays to be careful when investing in stocks since there's always the possibility that the stocks could drop lower and in some cases, for the companies to go bankrupt. The blog article's ending sums this caution aptly:
Just a bit of context to add while you’re considering some the buy-on-the-dips flavor of Prof. Siegel’s suggestions. After the crash 1929, the Dow didn’t return to its high of that year until 1954.
For complete blog article and the NPR interview, see:

WSJBlogs: Wharton’s Siegel: ‘A Time to Buy’

NPR.org: Expert Still Backs Investing In Stock Market’

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posted by Little Rishi @ Thursday, June 04, 2009  
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