Stocks are hitting the skids again Monday, and the renowned Wharton School finance Prof. Jeremy Siegel says they’re headed yet lower.
The Nasdaq Composite index has dropped 14% so far this year, and the S&P 500 has slid 10%, as the market reacts to higher interest rates and anticipates Federal Reserve rate hikes.
It would “not be unusual” for the Nasdaq to lose another 10% to 15%, Siegel told CNBC. “When a bear market comes, it doesn’t spare the good stocks or the bad stocks. They all go down,” Siegel told CNBC.
"I think there’s more pain to come.”
He expects the Fed to lift rates eight times this year, about double the market consensus. “There’s no way to completely safely weather this storm,” Siegel said.
He said investors should wait for the market to bottom out more before jumping in. And at that point, he recommends stocks of profitable companies.
“When the reaction and pessimism is over, those that are good stocks bounce back,” Siegel said. "And those that are not do not bounce back.”
A bigger bear than Siegel is Jeremy Grantham, co-founder of money manager GMO. He has been saying for several years that U.S. stocks are in a bubble, and he’s not changing his tune now.
“We have the most exuberant, ecstatic, even crazy investor behavior in the history of the U.S. stock market,” Grantham wrote in a commentary.
“The U.S. market today has, in my opinion, the greatest buy-in ever to the idea that stocks only go up, which is surely the real essence of a bubble.”