Checking in With Jeremy Siegel

Of course, Siegel has some gripes about how things are panning out. He says we still lack a uniform definition of operating earnings per share. He pins the decline in equities these last two years to first, the pricking of the tech bubble, and second, the lack of an agreed-upon definition of operating earnings. That's why people have lost a lot of faith in equities.

Therefore, it's obvious -- at least to me -- that we have to have a tough Accounting Standards Board to resolve the notion of operating earnings. Without that, we will remain vulnerable to shocks and shenanigans in the accounting world that simply have no place in the equity evaluation process. "Bring back the credibility of earnings per share," Siegel said, "and you will bring back the buyers."

At the panel this weekend, Siegel was adamant that long-term Treasuries are an atrocious place to be, saying he regards them as an extremely high-risk asset. He said those who want a better value should consider moving into the Vanguard high-yield corporate bond fund instead. (I am in the Intermediate Term Corporate Bond fund because, shockingly, I am a little more risk-averse with my own money than the professor!)

Siegel told us that he also sees value in real estate investment trusts now that they have come down, and he urged me to devote more time to them. I promised I would, although I defer to our own Chris Edmonds for selections in that group.

Finally, Siegel addressed the notion of exogenous risk. He said he felt that the terrorist danger was reminiscent of the Cold War danger, pointing out that right after the Cuban Missile Crisis, which he regarded as quite similar in dimensions to the current threat, stocks enjoyed a great ride. Obviously, another attack on America would produce a big decline in stocks, but he and I agreed that we have made it more difficult for Al Qaeda to strike than it was prior to Sept. 11, 2001.

---

James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. At the time of publication, Cramer was long Nortel, Royal Dutch and ExxonMobil. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column to [e-mail]. Click here to get Cramer's book, "Confessions of a Street Addict."

TheStreet.com has a revenue-sharing relationship with Amazon.com under which it receives a portion of the revenue from Amazon purchases by customers directed there from TheStreet.com.