Stock market guru Jeremy Siegel, a professor of finance at University of Pennsylvania, hasn't dropped his long-term bullishness toward equities, but he does think a 10 percent correction is on tap for next year.
"We've gone so long. I think in 2015 we'll have our 'first' [10 percent] correction," he told
CNBC.
"People say, 'Doesn't that mean I should wait for that?' The answer is no, because if it's up 15 percent and then goes down 10 [percent], you're still better off buying today. You don't know when that [the correction] is going to come."
Based on intraday highs and lows, the S&P 500 index already endured a 10 percent correction from Sept. 19 to Oct. 15, but Siegel is likely measuring by closing levels.
Last month, he predicted the Dow Jones Industrial Average might reach 20,000 by the end of next year.
"I still think, given the tailwinds we're going to have, the market looks attractive to me," he said. The tailwinds include falling oil prices — they have dropped 40 percent since late June — and GDP growth that Siegel thinks will register 3 to 4 percent in 2015.
Some are calling for the expected rise in interest rates to hurt stocks. But Siegel isn't worried. "Yeah, interest rates are going to go up, but not that much."
He predicts the Fed funds rate could end 2015 at 0.75 percent or 1 percent. "That's not a scary rate at all in terms of equity. I mean, the average dividend yield on S&P is still about 2 percent. So you're better off sitting with stocks that do nothing on price than holding cash or holding bonds."
But some question how well the United States economy can weather the stagnation overseas.
"When you look at the major drivers of global growth — Japan, China and the eurozone — they're really struggling," Bill Strazzullo, chief market strategist at Bell Curve Trading, told
The Associated Press.
"Can the U.S. continue to grow at a moderate pace when the rest of the world is having major problems?"