Jeremy Siegel - Faculty Research in Knowledge@Wharton

Wall Street Report: Big Profits amid the Ruins

Wed, 22 Jul 2009 15:41:58 EST

In separate interviews, Wharton finance professors Franklin Allen and Jeremy J. Siegel offered contrasting reactions to the large second-quarter profits at Goldman Sachs and J.P. Morgan. Allen said that while the firms' quarterly results reflected overall gains on Wall Street, "by and large, you can't make large sums of money without taking risks." He worries that the government's intervention in the financial sector last fall, which benefitted these firms and others, created an environment of moral hazard. Siegel was less concerned about this issue, noting that "both these firms now have a lot to lose after having recovered a lot."

Obama's Regulatory Plan: Too Hot, Too Cold, or Just Right?

Wed, 24 Jun 2009 16:27:19 EST

Five months into his administration, President Barack Obama on June 17 unveiled his complex, sweeping financial proposals to create a "21^st century regulatory framework" for the U.S. The proposed regulations give the Federal Reserve more power to watch over Wall Street and also create a new agency to curb abuses by mortgage and credit card lenders. Wharton professors and other experts say that while the new framework does not hamper financial innovation, it is also "too timid" and fails to address serious problems.

Jeremy Siegel: 'The Market Will Stage Another Recovery'

Wed, 24 Jun 2009 16:27:19 EST

Now that it's clear the recession will not turn into a depression, stocks are poised for a recovery, says Wharton finance professor Jeremy J. Siegel. In an interview with Knowledge@Wharton, he said last week's market decline in response to rising commodity prices -- especially for energy -- and fear of the ever-growing federal deficit was no more than a short-term setback.

Deflation Fears: Could Falling Prices Let the Air Out of a Recovery?

Wed, 13 May 2009 16:53:27 EST

Experts are far from unanimous on the question, with some arguing that deflation could be widespread, while others insist an economic rebound and government stimulus efforts make deflation less likely. Some fear that a stimulus-driven recovery could trigger the opposite: inflation.

Why Economists Failed to Predict the Financial Crisis

Wed, 13 May 2009 16:53:27 EST

A sense that they failed to see the financial crisis brewing has led to soul searching among many economists. While some did warn that home prices were forming a bubble, others confess to a widespread failure to predict the damage the bubble would cause when it burst. Some economists are harsher, arguing that a free-market bias in the profession, coupled with outmoded and simplistic analytical tools, blinded many of their colleagues to the danger. A recent paper from a conference of economists calls for changes in the way they are trained.

The 100-day Dash: An Ambitious but Worrisome Start for the Obama Administration

Wed, 29 Apr 2009 14:19:24 EST

As President Obama wraps up his first 100 days in office, he gets high marks from several Wharton and University of Pennsylvania faculty for his reassuring leadership skills. But they also worry about the cost of his ambitious agenda, and wonder when he will start establishing priorities for what gets tackled when.

Why Stock-price Volatility Should Never Be a Surprise, Even in the Long Run

Wed, 29 Apr 2009 14:19:24 EST

Equities are subject to much wider price swings than previously understood, according to a recent paper co-authored by Wharton finance and economics professor Robert Stambaugh. The research adds a new perspective to the work of Wharton finance professor Jeremy J. Siegel, author of the book Stocks for the Long Run, which says stock returns more than offset risks if you stay with the market through its ups and downs. In a recent interview with Knowledge@Wharton, the professors described their views about the market's long-term behavior.

The $2 Trillion Question: Will Investors Buy the Government's Toxic Asset Plan?

Wed, 01 Apr 2009 17:13:39 EST

The Obama administration aims to move $2 trillion in toxic assets off financial institutions' books by offering taxpayer-backed loans to hedge funds and other investors, trying to improve on earlier strategies that have failed to rekindle trading in securities backed by mortgages and other debt. The goal is to thaw the credit markets -- to get banks to lend money the economy needs to grow. Will it work? Experts have mixed views.

Are 'Mark-to-market' Accounting Rules on the Mark?

Wed, 01 Apr 2009 17:13:39 EST

On April 2, the Financial Accounting Standards Board is expected to vote on a proposal to relax a standard at the heart of the financial crisis -- mark-to-market accounting rules that require toxic assets to be carried on companies' books at fire-sale prices, based on recent trades of similar assets for far less than they would command in normal times. Many big banks say the crisis has been made worse by these rules. Not everyone agrees.

Jeremy Siegel: 'Once the Market Has Fallen 50%, Your Future Returns Are Even Better'

Wed, 18 Mar 2009 16:34:51 EST

U.S. stocks raised eyebrows this week and last, closing higher in six of seven trading days, including four in a row from March 10 to 13. But how does the market look for the longer term? In an interview with Knowledge@Wharton, Wharton finance professor Jeremy J. Siegel says he was pleased to see consecutive gains after so many declines. He adds that history provides lots of evidence that stocks remain good long-term investments, especially when they are down 50% from their peak.

Has the Time Come to Nationalize Struggling Banks? Yes, but Carefully

Wed, 18 Feb 2009 17:51:20 EST

After a generation of increasingly relaxed regulation of the financial services sector, the very concept seems stunning: Nationalization of banks in Europe and the United States. But with many global banks still teetering on the brink of insolvency -- even after rescue efforts that have included multi-billion dollar infusions of capital and other forms of assistance -- a different view is emerging. A growing number of economists -- including, most recently, Alan Greenspan -- now argues that temporary government takeovers of the most deeply troubled institutions may be the only remaining solution.

Trade Wars: Will Protectionism Win out over Recovery?

Wed, 18 Feb 2009 17:51:20 EST

When governments around the world spend vast sums to stimulate their economies, it seems only reasonable for each to invest at home. Why should the American taxpayer pay for steel from Canada when U.S. steelmakers are struggling? So it was hardly a surprise that the $787 billion stimulus plan just signed by President Barack Obama included protectionist language. But economists and political leaders in the U.S., Europe and elsewhere worry that such sentiments threaten free-trade principles that are crucial to any global economic recovery.

Why China Needs to Grow Its Economy, or Risk Growing Unrest

Wed, 04 Feb 2009 17:07:39 EST

China's leaders have long held that the economy must grow by at least 8% a year -- the minimum needed to maintain order and keep everyone employed. But given recent layoffs, factory shutdowns and the drop in world trade, 8% is going to be a difficult number to hit. What are the consequences to the Chinese government and the Chinese people of growing unrest among the unemployed, especially China's huge migrant population? As one expert notes: The country "can no longer rely on the model that has worked since 1978."

Lesson One: What Really Lies Behind the Financial Crisis?

Wed, 21 Jan 2009 16:32:55 EST

What was the true cause of the worst financial crisis the world has seen since the Great Depression? Was it excessive greed on Wall Street? Was it mark-to-market accounting? The answer is none of the above, according to Jeremy Siegel, a professor of finance at Wharton. While these factors contributed to the crisis, they do not represent its most significant cause. Siegel provided a detailed analysis of the factors that fueled the meltdown during the inaugural lecture of a 15-session course on the financial crisis that Wharton is offering MBA and undergraduate students.

The Financial Crisis: Bad and Getting Worse, but Put Away that D-word

Wed, 21 Jan 2009 16:32:55 EST

It began as the "subprime crisis" in 2007, and then mushroomed into a full-blown global recession in 2008. And still, despite mammoth government intervention, the bad news keeps getting worse. Are we now teetering on a precipice, ready to plunge into another Great Depression? Can the latest proposals pull the economy out of its nosedive? There is plenty to worry about. But while many experts say this crisis is the worst since the Depression, that doesn't mean it will be as bad.

On the Job Training: Can Obama's Huge Infrastructure Program Really Work?

Wed, 07 Jan 2009 16:53:55 EST

President-elect Barack Obama's infrastructure plan has drawn considerable debate, but mostly over the details -- the size of the stimulus program, how to structure the plan to create the most jobs in the shortest time, and how to administer such a large program to limit corruption and pork-barrel projects. The bigger questions remain unanswered, including to what extent new jobs will actually be created, and how all this spending will affect the government's long-term debt.

Jeremy Siegel's Advice to Banks: Lend That Money Now

Wed, 26 Nov 2008 12:18:24 EST

Before the stock market and the broader economy can return to something that looks like normal, banks must start to lend the billions they are getting from the U.S. Treasury's Troubled Asset Recovery Program, says Wharton finance professor Jeremy Siegel. In an interview with Knowledge@Wharton, he also discusses the government's rescue of Citigroup and the proposed bailout of the U.S. auto industry.

The Fairness Issue: How to Cope with the Flood of Foreclosures

Wed, 26 Nov 2008 12:34:08 EST

Is the cavalry coming to rescue troubled homeowners? Despite soaring foreclosure rates, President Bush and other Republicans have not made this a top priority. But this could soon change: President-elect Barak Obama and fellow Democrats say reducing foreclosures is crucial to attacking the financial crisis. As one expert notes: "The financial sector weaknesses all originate in the housing market. If we don't solve the housing problem, then the weaknesses in the financial sector are going to continue to multiply."

Dear President-elect Obama: Here's How to Get the Economy out of the Ditch

Wed, 12 Nov 2008 15:57:28 EST

President-elect Barack Obama must lead a nation mired in a worsening recession and burdened by the costs, both financial and human, of two wars and rising debt. Wharton faculty offer some counterintuitive advice: Now may be the time for the government to spend a lot of money.

Richard Marston and Jeremy Siegel: Will the Bank Plan Revive Global Markets?

Wed, 15 Oct 2008 17:08:35 EST

With stock markets in free fall, U.S. Treasury Secretary Henry Paulson announced on Tuesday that the government's effort to unlock credit markets would include direct investments of $250 billion in bank equities. He also warned bankers not to hoard the money, but to use it to make the loans that lubricate the nation's economy. In separate interviews, Wharton finance professors Richard Marston and Jeremy Siegel tell Knowledge@Wharton that while the investment is not without risk, it appears to be the best hope for restoring confidence in credit and stock markets -- and reducing the severity of a recession that is all but certain to come.

How the Credit Crisis Could Forge a New Financial Order

Wed, 15 Oct 2008 16:48:07 EST

As officials worldwide scrambled to contain the spreading financial virus, hopes are rising that the latest government plans to purchase equity stakes in banks may finally offer the right medicine. And with the patient showing intermittent signs of improving, thoughts turn towards next steps, including new restrictions on the markets. In addition, expect individuals and business to have a tougher time getting loans for years -- not just months. And watch for authorities to prescribe greater transparency, stricter capital requirements to reduce leveraging, and more standardized financial contracts to push opaque securities into the sunlight.

The $700 Billion Question: How Much Is That Exotic Security?

Wed, 01 Oct 2008 17:12:09 EST

Economists and financial experts don't all agree that the Bush Administration's $700 billion Wall Street rescue plan -- a taxpayer-funded purchase of troubled mortgage securities -- is the best way to attack the credit crunch. However, even those who support the plan acknowledge that there is an unanswered question at its core: How would the government know if it is paying the right price for the exotic securities it plans to buy?

Huge Reserves, Emerging Market 'Challengers' and Other Forces Are Changing Global Finance

Mon, 22 Sep 2008 16:32:49 EST

Rapidly developing economies have become drivers of change -- and sometimes disruption -- in global financial markets. That has important implications for companies in the U.S. and Europe as new players emerge, including sovereign wealth funds, state-controlled entities and acquisition-minded corporations. According to experts at Wharton and The Boston Consulting Group, these entities will increasingly look to buy assets beyond their borders, including controlling stakes in foreign companies.

Jeremy Siegel on the Market: Rough Going for Now, but Stocks Still a Good Bet

Wed, 17 Sep 2008 20:25:57 EST

The government's rescue of Fannie Mae, Freddie Mac and AIG demonstrated clearly that the financial turmoil continues on Wall Street. In an interview with Knowledge@Wharton, Wharton finance professor Jeremy Siegel says there are some positive signals in stocks and corporate earnings, but that it's too soon to conclude the market has hit bottom. Siegel also talked about inflation and commodities.

Will the Levee Break? An Ocean of Bad Debt Rises despite Fed Rescues

Wed, 17 Sep 2008 20:25:57 EST

The rescues, bankruptcies and dizzying write-downs for Fannie Mae, Freddie Mac, Lehman Brothers, Merrill Lynch, AIG and other giants of international finance signal a reckoning for Wall Street wizards who engineered the ongoing credit crisis with opaque securities based on risky subprime home loans and the assumption that housing prices would never decline, according to a panel of Wharton professors. The flood of bad debt, they add, won't subside anytime soon.

Note to Investors: Don't Play Games with Asset Allocation

Wed, 17 Sep 2008 20:25:57 EST

Big market downturns and jarring volatility have left small investors feeling whipsawed -- and nervous. But it would be a mistake to abandon classic long-term personal finance principles in the face of recent challenges. The 60% stocks, 30% bonds and 10% cash approach remains the best strategy. Wharton finance professors Jeremy Siegel, Richard Marston and Franklin Allen explain why.

After the Bailout: How Can the Fed Clean Up the Fannie and Freddie Mess?

Wed, 17 Sep 2008 20:25:57 EST

The government's refusal to save Lehman Brothers begs a question: Why did it step in only a week earlier to risk up to $200 billion in taxpayer money to shore up mortgage giants Fannie Mae and Freddie Mac? Wharton faculty say the government made the right move -- and offer suggestions for the next step.

Jeremy Siegel on the Bear Market, Sky-high Oil Prices and Other Bad News

Wed, 09 Jul 2008 17:41:20 EST

The stock market's June swoon has carried into July, with key indicators pointing to a bear market weighed down by rising oil prices, the credit crisis and more bad news from Detroit, as the Big Three auto manufacturers reported substantial losses. Meanwhile, the G-8 gathered in Japan to discuss global warming and the economy, but didn't include the two largest emerging economies -- China and India -- in the talks. Knowledge@Wharton spoke to Wharton finance professor Jeremy Siegel about these developments and others.

Credit Crisis Interview: Jeremy Siegel on Ignoring Risks

Fri, 20 Jun 2008 12:29:56 EST

The subprime crisis "was a wreck that could have been predicted," Wharton finance professor Jeremy Siegel says in this interview. Siegel is one of seven Wharton professors interviewed by Knowledge@Wharton for this special report on the credit crisis.

Subprime Crisis: Did Bernanke Go Too Far, or Did He Not Go Far Enough?

Fri, 20 Jun 2008 12:30:21 EST

To restart the economy, the Federal Reserve created new channels of lending, cut target rates. The prompt and aggressive action was spurred by Chairman Ben Bernanke's research on the Great Depression. How will history judge his strategy?

Subprime Crisis: Could New Rules Avert Another Credit Crisis? Perhaps, but Be Wary

Fri, 20 Jun 2008 12:30:17 EST

An unusual alignment of economic conditions -- and some very careless and risky bets -- triggered the meltdown. Should regulators step in to prevent a repeat? Should the government rescue the wounded? Experts say some new rules may be in order, but the details will be important. A concern: Bailouts may encourage risky behavior.

Yanked from Obscurity: Why Finance Experts Are Rethinking LIBOR

Wed, 11 Jun 2008 16:37:46 EST

First, U.S. Bankers raised questions about how the daily London Interbank Offered Rate was calculated, and then The Wall Street Journal demonstrated that the rate was inexplicably diverging from what the data suggested it ought to be. Getting it right is important, because LIBOR is the basis for many kinds of loans. The British Bankers Association says it will make changes.

What's Behind the Flare-ups in Oil Prices? Jeremy Siegel and Witold Henisz Weigh In

Wed, 28 May 2008 14:40:09 EST

Memorial Day, which marks the beginning of the summer driving season in the U.S., saw gas prices at nearly $4 a gallon all over the country -- and even higher in states such as Florida. Globally, the picture looks more worrisome: Oil prices crossed a record $135 a barrel during the weekend of May 24-25, although by Tuesday prices had come down to $131. What's behind these regular flare-ups in oil prices? What are the major economic and geopolitical factors at work? How does expensive oil affect the U.S. and world markets, and what can we expect over the coming months? Knowledge@Wharton discussed these questions and more with finance professor Jeremy Siegel, author of The Future for Investors, and management professor Witold Henisz.

Jeremy Siegel on the Fed's Latest Cut, $4 Gasoline and the Best Strategy for Investors

Wed, 30 Apr 2008 18:57:32 EST

The economy seems to be sinking toward recession, with new home sales at their lowest since the early 1990s. At the same time, inflation is picking up. Some Americans are paying $4 for a gallon of gas and coming home from the supermarket with sticker shock. Today, the Fed deemed recession the bigger worry and cut short-term interest rates by a quarter of a percentage point, from 2.25% to 2%. Was this the right choice? How will it affect the financial markets? Should investors bet on a stock market rebound or hide on the sidelines? Knowledge@Wharton put these questions to Wharton finance professor Jeremy Siegel, author of The Future for Investors.

Gold May Glitter, but It Doesn't Stack up as a Long-term Investment

Wed, 30 Apr 2008 17:36:16 EST

Call it a gold rush, of sorts. Gold topped out at more than $1,000 an ounce in mid-March, up from about $680 a year ago. Although it dipped to just under $900 late in April, it has had a tremendous run, up from $350 five years ago. What has driven these price gains? What does gold tell us about the economy's future? Should ordinary investors buy it? Knowledge@Wharton talks to the experts.

Market Manipulation, or Just Business as Usual?

Wed, 02 Apr 2008 17:52:07 EST

The financial markets are in turmoil. Inflation is picking up. Home prices are falling. More companies are laying off workers. Oil prices are sky-high. It's getting harder and harder to borrow money. It seems like a nest of conspirators is preying on America. Even Washington is reinforcing the impression with talk of sweeping reforms to the system of economic oversight. Indeed, economic commentator Ben Stein has promoted the notion of market manipulation from the shadows, largely in the form of hedge funds. Yet Wharton faculty reject that idea, saying instead that the market is suffering a hangover from the easy-money excesses of recent years.

Jeremy Siegel on Bear Stearns, Rate Cuts and the Looming Threat of Inflation

Wed, 19 Mar 2008 16:20:58 EST

The ongoing credit crisis in U.S. financial markets has claimed a huge and high-profile victim: Bear Stearns. After being slammed by what amounted to a run on the bank during the week of March 10, the Wall Street firm agreed to be acquired -- for $2 a share -- by JP Morgan Chase over the weekend in a deal overseen by Federal Reserve chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Federal Reserve lowered interest rates the same day -- and did so again on March 18, by three-quarters of a percentage point. Are other Wall Street firms likely to follow Bear Stearns into oblivion? Will the Federal Reserve's efforts help to boost confidence in the financial system? Finance professor Jeremy Siegel, author of The Future for Investors, discussed these questions and more with Knowledge@Wharton.

ETFs Evolve -- For Better or Worse?

Wed, 19 Mar 2008 15:05:04 EST

With their low fees, all-day trading and tax efficiency, exchange-traded funds have captivated investors. There were no ETFs before 1993; today, there are nearly 700. While most experts think ETFs were a good innovation -- built like index-style mutual funds but traded like stocks -- some worry that the increasingly specialized ETFs introduced in recent years stray from the faith, encouraging too much risk-taking. That concern is heightened by recent Securities and Exchange Commission proposals to let new funds come to market with less oversight, and to invite proposals for introducing actively managed ETFs. Knowledge@Wharton looks at the recent action, and angst, surrounding ETFs.

Jeremy Siegel on Politicians, Prices and a Potential 'Buying Opportunity of the Decade'

Wed, 05 Mar 2008 15:48:59 EST

The U.S. presidential race has reached a critical juncture. The Republicans have a confirmed nominee in John McCain; as for the Democrats, Hillary Clinton has bounced back, while Barack Obama retains a marginal lead in terms of delegates. How the presidential race evolves will be shaped in part by the increasingly worrisome state of the U.S. economy. Though it has not yet gone through two consecutive quarters of negative growth -- the common definition of a recession -- signs of a slowdown are evident everywhere. What lies ahead for the U.S. and world economies? What is the right strategy for investors in this environment? Knowledge@Wharton discussed these questions and more with finance professor Jeremy Siegel, author of The Future for Investors.

The Economic Stimulus Package: Will It Work, and for Whom?

Wed, 20 Feb 2008 15:24:45 EST

Congress and the White House recently settled on an economic stimulus package with unusual speed, pushing the throttle to pull the economy out of a nosedive. Is this just election-year grandstanding, or does economic stimulus really work? While some experts argue that priming the economy now is unnecessary or even counter-productive, others support the $168 billion package and its emphasis on low and moderate-income recipients. As for the health of the economy overall, experts agree that no economic boom is in the near-term forecast.

It's a Bird...It's a Plane...It's a Recession, or Is It?

Wed, 23 Jan 2008 16:51:55 EST

It's been quite a week. Stock markets around the world showed sharp declines on Monday; on Tuesday, the Federal Reserve cut its benchmark interest rate by three-quarters of a percentage point. The rate cut helped stem the losses on some indexes, but by January 23, the volatility had returned. The obvious fear is one of recession -- a possibility that the White House and Congress are trying to avert by coming up with a stimulus package that will keep the economy off life support. How effective will the Fed's interest rate cut be, and what is the outlook for the Asian and European economies? Knowledge@Wharton asked finance professors Jeremy Siegel and Franklin Allen to comment on these issues.

Advice to Investors: Sit Tight and Batten Down the Hatches

Wed, 23 Jan 2008 16:49:57 EST

The worldwide collapse of stock prices has many victims -- pension funds, insurance companies, hedge funds, financial services firms. But those are players who, if they are smart, have the wherewithal to withstand a steep sell-off. What about the small investor, the individual who is socking away modest sums for retirement or college costs? Should small investors rush for the sidelines? Or should they view this as a buying opportunity? Knowledge@Wharton asked six experts for advice on investment strategy.

What's Ahead for the Global Economy in 2008? Reports from the Knowledge@Wharton Network

Wed, 09 Jan 2008 16:49:19 EST

Though the subprime mess and rising oil prices slammed the U.S. economy during much of 2007, other emerging markets -- especially China and India -- seem to be on a roll. China's growth rate of more than 11% is likely to continue, and India, too, should be able to sustain a high rate of GDP growth, even if it slows from last year's 9%. Latin America, meanwhile, is cautiously optimistic but could see a moderate decline in 2008. The Knowledge@Wharton Network sites -- including Universia Knowledge@Wharton, China Knowledge@Wharton and India Knowledge@Wharton -- spoke with Wharton faculty and other experts about what to expect during the coming year.

Jeremy Siegel on the Interest Rate Cut: The Fed May Be 'Behind the Curve'

Wed, 12 Dec 2007 14:47:25 EST

For the third time in the past few months, the Federal Reserve's Open Market Committee has chosen to cut short-term interest rates by a quarter percent or 25 basis points. The Fed cut its main short-term rate target to 4.25% and the "discount rate" charged on direct Fed loans to commercial banks to 4.75%. In its statement justifying the decision, the Fed noted, "Incoming information suggests that economic growth is slowing, reflecting the intensification of the housing correction and some softening in business and consumer spending. Moreover, strains in financial markets have increased in recent weeks. Today's action, combined with the policy actions taken earlier, should help promote moderate growth over time." Will the Fed's decision help promote "moderate growth?" Knowledge@Wharton asked Jeremy Siegel, a professor of finance at Wharton and author of The Future for Investors, to analyze the Fed's decision and its impact on the markets.

Good, Bad or Ugly --Is It Impossible to Predict What's Ahead for the U.S. Economy?

Wed, 14 Nov 2007 15:21:26 EST

At the end of October, the Federal Reserve gave the financial markets just what they had been asking for: a 0.25% cut in the federal funds rate. But in early November, stocks plunged and the dollar hit a new low. Applause turned into hand-wringing -- then back to applause as the markets rebounded in the middle of the month. Why can't the experts make up their minds? Is the outlook good or bad? According to Wharton faculty, forecasting is particularly hard now because some of the key factors -- such as the credit crunch arising from the subprime mortgage mess, spiking oil prices and the plunging dollar -- have little historical precedent. The result: Finance experts, including the Fed, may not be able to see too far down the road.

What's Ahead for Financial Markets? Perspectives from Jeremy Siegel and Jacob Wallenberg

Wed, 03 Oct 2007 14:55:04 EST

After a terrible August, when the U.S. stock market appeared to be headed for the pits, October 1 saw a massive rally that sent the Dow Jones Industrial Average soaring above 14,000. The following day, however, stocks began to fall again, mainly due to a sharp drop in home sales. In short, Wall Street still seems to be sending out mixed signals. What will be the long-term effects of the Fed's decision to cut interest rates? Will the U.S. economy move past the sub-prime mortgage mess? How will these developments affect the European market? Knowledge@Wharton spoke with Wharton finance professor Jeremy Siegel and Jacob Wallenberg, chairman of the board of Investor AB and vice chairman of Sweden-based SEB.

What's Ahead for the Stock Market -- and Quant Funds

Wed, 22 Aug 2007 13:35:36 EST

After weeks of skittishness and fear, investors showed signs on Tuesday of settling down. "Yesterday was one of the dullest days in the market that we've had in a while, and that's good in many ways," says Wharton finance professor Jeremy Siegel. Investors have been reeling from widespread problems in the subprime sector, stocks have fallen, yields on Treasury securities have dropped and some companies are finding it hard to borrow money -- all of which spurred the Federal Reserve last week to announce a cut in interest rates. Meanwhile, the upheaval has shown that quant funds, despite their computer power, aren't immune to mistakes and market downturns. So what can we expect in the weeks ahead?

Eyes on China: The Costs of Progress

Wed, 08 Aug 2007 16:08:27 EST

On August 1, Mattel recalled approximately 1.5 million toys made by a manufacturer in China because of dangerous levels of lead in their paint. Four days earlier, the Chinese government ordered the country's banks to increase their reserves as part of an effort to cool down its red-hot economy. But quality concerns and rapid growth aren't China's only worries. There is also the government's need to keep forging ahead on preparations for the Olympics next August in Beijing, despite criticism about overdevelopment and unsafe levels of pollution. Knowledge@Wharton asked management professor Marshall Meyer for his perspective on these issues.

Jeremy Siegel: Sit Tight During the Sell-Off

Wed, 25 Jul 2007 15:32:16 EST

U.S. stock markets are in a tizzy. The Dow Jones Industrial Average plunged 311 points on July 26, and most media companies interpreted this to mean the end of the buyout boom. Buyout firms such as the Fortress Investment Group and the Blackstone Group were hit especially hard. How long will the turmoil continue? Could the trouble spread overseas to international markets? What is the right strategy for investors in these times? In an update to the podcast that Knowledge@Wharton published on July 25, Wharton finance professor Jeremy Siegel offers his insights on these questions. In the earlier podcast, he discussed the continuing crisis involving sub-prime housing loans and other issues -- including economic growth in China and the impact of the strong Indian rupee -- with Knowledge@Wharton.

Jeremy Siegel: Rising Bond Yields Mean Trouble for All Markets

Wed, 13 Jun 2007 15:07:52 EST

U.S. financial markets were battered at the end of last week because of a dramatic sell-off of Treasury bonds. The yield on 10-year bonds, which has been rising since May, neared the critical barrier of 5.25% on June 8 -- the highest level in five years. Media reports suggest that turmoil in the bond market could continue this week, making investors anxious about whether interest rates might go up and bring to an end the period of cheap money that has buoyed up asset markets and also funded a world-wide boom in mergers. Why are bond yields so high? What do these developments mean for stocks and other asset classes? Knowledge@Wharton discussed these questions with Jeremy Siegel, a professor of finance at Wharton, and author of The Future for Investors.

Aging Populations Can Prosper, or Not: Making the Right Investment Choices

Wed, 02 May 2007 09:59:26 EST

The U.S. population is getting older as the "age wave" of baby boomers nears retirement. Will their 60s, 70s and 80s be happy years, marked by prosperity, good health and fulfilling activities? There's every chance of that, according to two keynote speakers at Wharton's 2007 Economic Summit: Wharton finance professor Jeremy Siegel and Michael Milken, head of The Milken Institute, a non-partisan think tank. But both men cautioned that their optimism relies on taking steps to ensure, among other things, open markets and an educated, healthy workforce.

Jeremy Siegel: 'We Can Look for More Gains in the Stock Market'

Wed, 21 Mar 2007 19:52:02 EST

All eyes and ears were on the two-day meeting of the Federal Reserve's Open Market Committee (FOMC) that ended on March 21. While most observers did not expect interest rates to change, the markets were keen to know what language the Fed would use about inflation in its statement on economic and monetary policy. The U.S. economy has seen mixed signals lately, and concerns about recession have been replaced by worries about "stagflation" -- or stagnation combined with inflation. Is stagflation really looming, and if so, what will it mean for investors? To answer these questions, Knowledge@Wharton spoke with Wharton finance professor Jeremy Siegel.

China Stumbles, Markets Tumble: Will the Volatility Continue?

Wed, 07 Mar 2007 15:18:06 EST

The Economist called it "a snort from a dragon's nostrils." At the end of February, as China's stock market index fell by more than 8%, stock markets tumbled around the globe in their steepest decline since the attacks on September 11, 2001. Adding to the anxiety were concerns about a possible shakeout in the U.S. sub-prime mortgage market and former chairman of the Federal Reserve Alan Greenspan's comment that the U.S. economy could face a recession. Since then, markets have recovered, only to drop again, and then climb once more. What is causing this volatility, and what does it mean for investors? Knowledge@Wharton asked for comments from Wharton finance professor Jeremy Siegel, whom we spoke with first, and Wharton management professor Marshall Meyer, who closely follows China's economy.

Jeremy Siegel: Stocks Will Continue Their Upward Trend

Wed, 21 Feb 2007 14:55:13 EST

Some media reports called it a Valentine's Day gift to Wall Street. When Federal Reserve chairman Ben Bernanke appeared before Congress on February 14 and 15, he gave an upbeat view of inflation and the economy, setting off a strong rally in stocks. The Dow Jones industrial average rose 87 points to 12,741.86. Bernanke told Congress that the economy seems to be moving to a slower but more sustainable rate of growth, which suggests that the Fed will hold short-term interest rates steady at 5.25%, where they have been since last summer. Will stocks continue to perform strongly? Knowledge@Wharton talked to Wharton finance professor Jeremy Siegel, who predicted in his last podcast that the Fed was unlikely to raise interest rates anytime soon.

Jeremy Siegel: Interest Rates Look Stable, but Beware the China Bubble

Wed, 24 Jan 2007 15:35:06 EST

The U.S. economy may be getting stronger, but that doesn't mean interest rates will go up when the Federal Reserve meets next week on January 31. According to Wharton finance professor Jeremy Siegel, interest rates should hold firm at their current level for quite a while. In an interview with Knowledge@Wharton, Siegel discusses the current balance "between strength and moderate inflation," where the housing market is headed, and why investors should be cautious about emerging markets like China, which "looks like a bubble."

What's Ahead for 2007? Knowledge@Wharton Network Surveys the Globe

Wed, 13 Dec 2006 16:02:13 EST

On the financial front, 2006 has been a pretty good year all around. Stock markets in many countries have rallied, energy prices have fallen, inflation is relatively low and growth in GDP ranges from respectable to robust. But the economies of most countries also face a number of threats -- some predictable, some not -- that could derail recent gains in our increasingly connected global markets. What's ahead for 2007 in the U.S., India, Europe, Latin America, China and other parts of the world? We offer a roundup of reports from the Knowledge@Wharton Network, including India Knowledge@Wharton, Universia Knowledge@Wharton and China Knowledge@Wharton.

Jeremy Siegel on the Impact of the November 7 Elections

Wed, 15 Nov 2006 16:32:21 EST

As the polls had widely anticipated, Democrats defeated the Republicans in Congress and also gained control of the Senate by a narrow margin in the U.S. mid-term elections in early November. As attention now turns to the Presidential elections of 2008, President George W. Bush will need to find ways to increase bi-partisan cooperation with Democrats like Nancy Pelosi, who is poised to become the first female Speaker in U.S. history. What do the mid-term elections mean for investors and the stock markets? How will they affect American relationships with emerging economies like China and India? What will be the fate of Bush's tax cuts? To discuss these questions and more, Wharton finance professor Jeremy Siegel, who leads Wharton Executive Education's Securities Industry Institute program, spoke with Knowledge@Wharton.

Jeremy Siegel on Why the Fed Won't Raise Interest Rates Soon

Wed, 18 Oct 2006 16:54:11 EST

Next week the Federal Reserve meets to decide whether to increase interest rates or to keep them unchanged -- but the picture on inflation looks unclear. On October 17, the Bureau of Labor Statistics announced that the Producer Price Index for finished goods fell by 1.3% in September. Much of this was driven by the drop in energy prices -- which have seen the sharpest decline in nearly three years. Core wholesale prices, however, went up by 0.6% because of a recovery in the cars and light trucks business. What do these mixed signals mean for the economy? Will the Fed's Open Market Committee keep rates steady or will there be an increase? Jeremy Siegel, a professor of finance at Wharton, spoke with Knowledge@Wharton about why the Fed is unlikely to raise interest rates, at least until the end of the year.

How Can Employers Improve Defined Contribution Plans?

Wed, 18 Oct 2006 16:48:45 EST

If 401(k)s and similar plans are the main way Americans invest for retirement, how can employers improve them? By making enrollment automatic, minimizing the use of the employer's stock, expanding the role of annuities and improving employees' financial knowledge, according to a set of recommendations issued by the Financial Economists Roundtable, a group of about 50 prominent economists, including several Wharton faculty members.

Podcast: Jeremy Siegel on Interest Rates, the Amaranth Implosion and the Thai Baht

Wed, 20 Sep 2006 15:52:44 EST

Optimism seems to be everywhere just as the Federal Reserve's Open Market Committee gets ready once again to pass judgment on where interest rates are headed. The consensus is that Fed chairman Ben Bernanke will keep the federal funds rate unchanged. Part of the reason is that oil prices are down and inflation seems to be under control. Still, the bursting of the commodities bubble has not been a universal blessing -- as investors in the Connecticut-based hedge fund Amaranth Advisors discovered after it lost $5 billion in value. The coup in Thailand also raises questions about international business risks. In an interview with Knowledge@Wharton, finance professor Jeremy Siegel spoke about these issues and more.

Podcast: Jeremy Siegel on the Fed's Decision to Pause Interest Rate Hikes

Wed, 09 Aug 2006 16:14:36 EST

After 17 consecutive interest rate hikes during the past two years, the Federal Reserve's open market committee decided on August 8 to leave the federal funds rate unchanged at 5.25%. While stocks immediately rallied in response, they fell back as it became clear that inflationary pressures persist, and they could prompt more rate hikes in the future. What does this mean for markets and investors? Wharton finance professor Jeremy Siegel told Knowledge@Wharton that Fed chairman Ben Bernanke met expectations, and "meeting expectations is very positive for stocks."

Podcast: Is the Economy in for a Soft Landing? Yes. Will it Become a Recession? No.

Wed, 12 Jul 2006 17:48:42 EST

In a recent newsletter, Wharton finance professor Jeremy Siegel noted that "everything is coming up roses for the equity markets -- except for the latest developments in the commodities markets." What does that imply for the economy and stock markets? Siegel, who is also the author of the book, The Future for Investors, notes that the economy is heading for a soft landing, which means it is slowing down. "But we're not going to a recession, by any means," he told Knowledge@Wharton in a recent discussion.

Two Investment Gurus Square Off on the Future of Indexing

Wed, 28 Jun 2006 15:11:00 EST

Over the past three decades, index-style investing has moved from the fringes to the mainstream, with an estimated $3 trillion now committed to this simple strategy -- to match broad market returns and give up as little as possible to fees and taxes. Clearly, indexing has served investors well and is here to stay. But can it be made even better? Wharton finance professor Jeremy Siegel thinks so. The standard index, which gives more weight to stocks of bigger companies, should be replaced by "fundamental indexing" that assigns each stock a role based on factors like corporate sales or dividend payments, Siegel says. But many index-investing experts are unconvinced. "I don't believe in new paradigms," says John C. Bogle, founder of the Vanguard Group mutual fund company, which specializes in traditional index investing. Siegel and Bogle offer their different views on indexing.

May's Market Collapse: What's an Investor to Do?

Wed, 31 May 2006 14:58:22 EST

American investors have poured money into foreign stocks in recent years, lured by the hope of outsized gains. They have been well rewarded in the past 12 months, but in May, markets plummeted around the world. Mutual funds investing in foreign stocks, for example, lost more than 8% in the two weeks ending May 25, although their previous stunning performance left them up nearly 31% for the 12 months ending on that date. The late-May plunge was especially severe in emerging markets. Is this another bubble bursting, the way the tech-stock bubble collapsed several years ago? Wharton professors offer their take on the downturn and its implications for nervous investors.

Podcast: Jeremy Siegel on Dangers of the Commodities Bubble

Wed, 31 May 2006 14:58:28 EST

The cover photograph in the latest copy of The Economist says it all. The May 25 edition has a picture of a bear peeping out of the woods, with a headline that asks, "Which Way is Wall Street?" The magazine notes in an editorial that after nearly three years of gains, international stock markets tumbled by more than 10% during the past couple of weeks. Emerging markets have been volatile, as have markets in Europe. Is this likely to lead to the kind of bearish slump that followed the dot-com bust in the spring of 2001? Or will the volatility pass? Jeremy Siegel, a finance professor at Wharton and author of the book, The Future for Investors, spoke with Knowledge@Wharton's Mukul Pandya and Robbie Shell about the commodities market, the appointment of Henry Paulson as the new Treasury Secretary and the challenges faced by Fed chairman Ben Bernanke, among other topics.

Jeremy Siegel on the Fed, Commodities and Global Markets

Wed, 03 May 2006 16:41:08 EST

As CBS News put it, "When the Fed Chairman Speaks, Everyone Freaks." What that hyperbolic headline refers to is the sell-off in stocks and rise in bond yields this week after Ben Bernanke, the Federal Reserve chairman, reportedly told a CNBC reporter that markets had misread his testimony before Congress last week during which he had seemed to hint that the Fed might pause in raising interest rates. Stocks and bonds rallied in response. But, after suggesting at a Washington correspondents' dinner over the weekend that the markets had "misunderstood" him, the sell-off began. What, exactly, is the Fed likely to do on May 10? And what will that mean for investors? Jeremy Siegel, a professor of finance at Wharton and author of the book, The Future for Investors, spoke with Knowledge@Wharton's Mukul Pandya and Robbie Shell about interest rates, oil prices, the commodities markets, Bernanke's learning curve and President Bush's approval ratings, among other topics.

China or India: Which Is the Better Long-term Investment for Private Equity Firms?

Wed, 26 Apr 2006 21:21:29 EST

There are strong prospects for private equity in the rapidly developing markets of India and China, according to Wharton faculty and private equity experts. In fact, they note, the debate over which country is the better venue for investing is less important than knowing how the strengths and weaknesses of each nation would impact a specific investment.

Foreign Stocks Are In, and So Is Indexing

Wed, 19 Apr 2006 17:26:19 EST

Foreign stocks are soaring and Americans are pouring money into them. But although overseas equities have captured investors' fancy before, there's a twist this time: More investors are embracing passive, index-style investing, ignoring the long-held belief that active managers can beat indexers by uncovering bargains in inefficient foreign markets. Have conditions really changed enough to make indexing pay off as well in foreign markets as it has in the U.S.? It may be too soon to know for sure. But international equity markets and American investor behavior are clearly evolving, according to Wharton finance professors.

Podcast: What Will Rising Interest Rates Mean for Investors and the U.S. Economy? Jeremy Siegel Offers His Views

Wed, 19 Apr 2006 17:26:31 EST

Interest rates are rising around the world. Last Thursday, April 13, the yield on 10-year U.S. Treasury notes closed at 5.05%. This was the first time in four years that the yield exceeded 5%. Moreover, short-term interest rates in the U.S. are also going up: The federal funds rate (or the interest rate at which banks provide overnight loans to one another) has risen to 4.75% from some 1% a few years ago. In Europe and Japan, stock prices have been falling last week and this week because of concerns that rising interest rates and higher oil prices will affect corporate earnings. What will this mean for the U.S. stock market and the economy? To answer this question, Robbie Shell, editorial director of Knowledge@Wharton, and Mukul Pandya, editor-in-chief, talked with Wharton finance professor Jeremy Siegel, author of the book, The Future for Investors.

The Merrill Lynch-BlackRock Deal Signals Major Shift in Financial Services

Wed, 08 Mar 2006 16:27:20 EST

When Merrill Lynch decided this month to sell its asset-management operation to BlackRock -- a money manager serving wealthy investors and institutions, and best known for its conservative focus on bonds and risk-management products -- analysts and investors cheered, bidding up the shares of both companies. By acquiring Merrill's $539 billion mutual fund family, BlackRock will quickly broaden its stock-fund offerings and its appeal to retail customers. Merrill, by acquiring just under 50% of BlackRock, will do well if BlackRock can strengthen the performance and appeal of Merrill's disappointing fund operation. But the cheering involves some wishful thinking as well. Merrill hopes to finesse its way out of its disappointing decision to embrace one of the late-1990s hottest fads: the financial supermarket. And BlackRock has to hope that investors don't come to see it as a de-facto Merrill subsidiary, inheriting Merrill's problems without adding value of its own to the asset-management business.

What Lies Ahead for the U.S. Economy in 2006

Wed, 08 Feb 2006 16:49:21 EST

The economic growth that the United States enjoyed in 2005 will continue in 2006, as stronger business investment begins to pick up the slack on the part of consumers who will curtail the white-hot spending that has been a key factor in propelling the economy, according to Wharton faculty members and private-sector economists. In addition, these experts say, oil prices will remain high in 2006, but not much higher than they are now, the residential real estate boom will cool and American workers will be forced to deal with a volatile employment market.

Yahoo's Strategy: Stay Out of Microsoft's Crosshairs?

Wed, 14 Dec 2005 16:41:41 EST

Yahoo defines itself as "a leading global Internet communications, commerce and media company" and, in doing so, has managed to stay somewhat out of the fray as giants like Google and Microsoft battle each other over everything from search dominance to providing a platform for next-generation web development. In fact, Yahoo's position as primarily a media company is likely to keep it quietly at the forefront of the next generation of world wide web players, say experts at Wharton. Even more importantly, they add, the strategy could give Yahoo a clever way to compete -- by targeting multiple areas, such as music, search and e-commerce -- without riling its major competitors.

New Fed Head Bernanke: Inflation Is Key

Mon, 21 Nov 2005 14:54:32 EST

Ben S. Bernanke is a superb choice to replace Alan Greenspan as chairman of the Federal Reserve, but he will have to demonstrate to financial markets that he is as much an anti-inflation hawk as his predecessor, according to Wharton finance professors and private-sector economists. These observers also say that Bernanke will speak more plainly in explaining Fed actions than Greenspan, whose cryptic, oracular comments became his trademark. Finally, Bernanke is likely to establish and publicly disclose the Fed's specific target, or target range, for the inflation rate -- a policy that Greenspan eschewed but one that is becoming more common among central bankers worldwide.

Exchange Traded Funds: What's the (Big) Deal?

Wed, 05 Oct 2005 16:04:41 EST

Exchange Traded Funds (ETFs) are on a roll: According to Morningstar, a Chicago based provider of independent investment research, 177 ETFs were listed as of August 31 with net assets of $255 billion, compared to 97 in 2002 with net assets of $89 billion. Why are ETFs so popular? Because they provide certain benefits that their mutual fund cousins do not. Like index-style mutual funds, ETFs are baskets of stocks designed to provide diversification and to mirror the performance of an underlying stock market index. Unlike mutual funds, ETFs can be traded throughout the day and can be used in short sales. They also offer some tax advantages over funds. But ETFs can have a downside too, especially if not used responsibly by investors.

Picking Up the Pieces from Katrina: What Lies Ahead

Mon, 21 Nov 2005 14:59:00 EST

When Hurricane Andrew struck south Florida in 1992, it caused what was then the largest natural disaster in American history, with more than $30 billion worth of damage. The economic fallout from Hurricane Katrina -- which last week ravaged New Orleans, La., and the Gulf coast -- looks to be much larger; indeed, some estimates put the damages/losses as high as $200 billion. Still uncalculated is Katrina's effect on the oil and gas industry, insurers, real estate, tourism and the financial markets, not to mention the future of hundreds of thousands of people displaced by the storm. Wharton professors assess the impact of what is clearly the costliest natural disaster ever to strike the U.S.

Jeremy Siegel on the Yuan: Buying China Some Time

Mon, 21 Nov 2005 14:59:50 EST

Responding to international pressure as well as a desire to deal with its own macroeconomic challenges, China decided last week to revalue its currency, the yuan, or the Renminbi. The People's Bank of China, the country's central bank, announced on July 21 that it would de-link the yuan from the dollar and peg it instead to a basket of currencies, altering an exchange rate system that has existed for a decade. China also revalued the yuan by 2.1%. What will these changes mean for Chinese companies that are trying to go global? And what will it signify for international firms doing business with China? To get answers to these questions, Knowledge@Wharton turned to Jeremy J. Siegel, a professor of finance at Wharton and author of the book, The Future for Investors.

Hedge Funds Are Growing: Is This Good or Bad?

Wed, 29 Jun 2005 16:12:24 EST

When the ratings agencies downgraded General Motors debt to junk status in early May, a chill shot through the $1 trillion hedge fund industry. How many of these secretive investment pools for the rich and sophisticated would be caught on the wrong side of a GM bond bet? In the end, the GM bond bomb was a dud. Hedge funds were not as exposed as many had thought. But the scare did help fuel the growing debate about hedge funds. Are they a benefit to the financial markets, or a menace? Should they be allowed to continue operating in their free-wheeling style, or should they be reined in by new requirements, such as a move to make them register as investment advisors with the Securities and Exchange Commission?

Revaluing the Yuan: Where Politics and Economics Collide

Mon, 25 Jul 2005 16:23:22 EST

As the Bush administration continues to pressure China to allow the yuan to rise against the dollar in order to stave off protectionist legislation in the U.S. Senate, Chinese officials continue to reply that they will not be coerced into taking action by a foreign government meddling in a matter of national sovereignty. Faculty members at Wharton and other China-watchers predict that China will eventually revalue the yuan, probably this year, because it is in China's own long-term interest to do so. These experts also note that the United States, by trying to force the issue in a vociferous, public manner, is possibly delaying the revaluation. In addition, they say, revaluing the yuan will not revitalize industries that have been battered by the movement of certain jobs to China, where labor and production costs are cheap.

A Finger on the Pulse of Berkshire Hathaway and Warren Buffett

Wed, 01 Jun 2005 16:49:02 EST

Throughout the spring, the snowballing financial scandal at insurance giant American International Group has put the spotlight on the firm's partner in the improper deal, General Re Corp. Could the damage extend to Gen Re's owner, Berkshire Hathaway Inc. and its legendary chief, Warren Buffett? The questions about Gen Re come on top of another that gets larger every year: Can Berkshire continue to deliver outsized returns to shareholders after 74-year-old Buffett, who has run the company for four decades, passes from the scene?

How the NYSE Merger Will Affect Investors

Wed, 01 Jun 2005 16:49:22 EST

When the stock market has a big day, TV news is sure to show hundreds of agitated men and women in colored jackets yelling to one another on the floor of the New York Stock Exchange. For more than 200 years, trading at the NYSE has used this "open outcry" auction system. "Specialists" representing sellers and those who represent buyers haggle until a deal is done. But on April 20, the exchange agreed to merge with Chicago-based Archipelago Holdings Inc., a trading company that joins buyers with sellers the modern way, inside quietly humming computers that work at light speed. Does this signal the end of the NYSE's human-based system? If it does, should small investors and other outsiders even care?

The Global Impact of Rising Oil Prices

Tue, 10 May 2005 15:56:38 EST

Crude oil hit an all-time high early in April, topping $58 a barrel -- and giving economists and financial-market analysts the shakes. Is an oil shock likely? And, given the enormous demand by China and other rapidly growing economies, is there any chance oil will drift back to comfortable prices in the $30 to $40 range? Knowledge@Wharton, China Knowledge@Wharton, and Universia Knowledge@Wharton interviewed experts in the U.S., China, Spain and Brazil for their perspectives on the impact of high oil prices on the world economy.

Jeremy Siegel's Latest Book Lays out the Future for Investors

Wed, 23 Mar 2005 12:10:33 EST

In his 1994 best seller, Stocks for the Long Run, Wharton finance professor Jeremy Siegel showed investors that stocks, rather than bonds or cash, are the most profitable long-term investments, and he endorsed index-style investing. But investors wanted to know more. "I gave scores of talks across the country on Stocks for the Long Run," Siegel recalled recently. "The two questions I received most were: 'Which stocks for the long run?' and, 'What about the age wave and the baby boom?'" Siegel's response was voluminous research for his new book, The Future for Investors: Why the Tried and True Triumph Over the Bold and the New. Some of its conclusions surprised even him.

The Economic Outlook for 2005

Wed, 12 Jan 2005 15:15:21 EST

Investors, consumers and businesses have had a fair share of concerns in 2004: high fuel prices, less-than-stellar job growth and volatile swings in the stock market, which remains well below the highs set four years ago. But by many measures the year is ending well. Oil prices dropped in December, hiring has picked up, and the Standard & Poor's 500 returned nearly 8% from the start of the year through mid-December. Will the good news continue in 2005? The smart money says the coming year will probably bring decent, but not terrific, gains in economic growth and stock prices, according to four Wharton professors, who nevertheless warn of possible fallout from the deepening federal and current-accounts deficits and the falling dollar.

The Next Four Years with George Bush

Wed, 17 Nov 2004 17:06:33 EST

President George W. Bush's re-election lifts a degree of uncertainty from business and the economy that could drive market rallies and stimulate growth. Eventually, however, a second Bush term that continues to fund tax cuts along with wars in Iraq and Afghanistan could ultimately weigh down the U.S. economy, according to Wharton faculty.

Tug of War over Tech Stocks: Are They Heading Up, or Down?

Wed, 17 Nov 2004 17:06:54 EST

These days, investors don't have to search far for reasons to jump on the technology bandwagon. The hit that Google's IPO scored is looking like a homerun; stock valuations are relatively cheap compared to previous multiples; companies like Apple Computer are reporting strong earnings on sales of the innovative iPod, and the sector is entering a seasonally strong fourth quarter. Investors also seem to be betting that the worst news is over for key industries such as semiconductors. So does that mean there will be a tech stock renaissance, or should we expect something a little less exuberant? Wharton faculty and stock analysts weigh in.

What's Hot? Stocks Are Not

Wed, 25 Aug 2004 22:18:02 EST

Corporate profits have rebounded handsomely this year, with the typical Standard & Poor’s 500 company reporting earnings gains exceeding 20% for the first half. Why, then, is the stock market in the doldrums? From Dec. 31 through July 27, the S&P 500 was down about 2%, while the Dow Jones Industrial Average was off 4% and the Nasdaq Composite was down 7.6%.

Why Capital Spending -- and Corporate Confidence -- Are Low

Wed, 25 Aug 2004 14:35:51 EST

Technology buyers hit the brakes toward the end of the second quarter 2004 and it’s worth asking whether spending on software and hardware – not to mention capital spending overall – is being hampered by gun-shy corporate executives. Experts at Wharton say the June lull that resulted in a slew of technology profit warnings is probably a soft patch, but they are reserving judgment for now. Yet given that capital spending from corporations has largely been absent during a consumer-fueled economic rebound, one wonders whether executives are becoming unnecessarily risk averse.

Bush vs. Kerry: The Economy, Taxes, Health Care and Social Security

Wed, 28 Jul 2004 12:53:59 EST

There are two

Americas

, one well off and one left behind, and tax cuts for the rich must be repealed, says the campaign of John Kerry and John Edwards.

America

’s economy is on the rebound, jobs are being created, and across-the-board tax cuts have been a key reason for that growth, according to the George Bush and Dick Cheney ticket. Yes, it’s that time again – a presidential election year full of attacks and counter attacks, of claims and counter claims, of half truths and less-than-half truths, and sometimes no truth at all. In this issue of Knowledge@Wharton we canvass Wharton faculty members to get their views on the candidates’ stands on the economy and taxes, health care and Social Security.

Can We Trust the Mutual Fund Industry Yet, or Is Reform Illusory?

Wed, 28 Jul 2004 12:53:59 EST

Nine months after the first revelations of trading abuses in mutual funds, the Securities and Exchange Commission in June tackled the cozy relationships that, according to critics, have long prevented fund directors from properly overseeing fund managers. And, in recent months, several fund family executives have been forced to step down, companies have paid more than $2 billion in fines and a string of fund managers has faced civil and criminal charges. Are the enforcement actions and new rules enough to stop late trading, market timing and other abuses? Will governance reforms drive down the fees paid by investors?

Inflation: How Aggressive Will The Fed Be?

Thu, 17 Jun 2004 15:18:22 EST

Inflation has been subdued for so long that in the last couple of years economists, academics and officials at the Federal Reserve were more concerned about the possibility of deflation – a period of falling prices – than inflation. As it happened, deflation never did come to pass; inflation, however, is very much back in the news. Fed watchers do not think that the United States is headed for the kind of rampant inflation that ravaged the economy more than two decades ago. Developments on the price front, though, have reached enough of a critical mass that the financial markets expect the Fed to raise interest rates in the coming months to keep prices from spiraling. The key question is just how hard-hitting the Fed will be.

The Short- and Long-Term Outlook for Stocks

Wed, 02 Jun 2004 12:53:06 EST

Baby boomers are amassing trillions of dollars in stocks, bonds and mutual funds for retirement. But when they quit work and start selling those assets, will there be enough buyers? Or will supply outstrip demand, driving down prices and leaving the retirees with far less than they had expected? Wharton finance professor Jeremy Siegel addressed these issues during a presentation at Wharton on May 15 in which he also talked about the current financial markets, worker productivity and growth in developing countries.

Is the New York Stock Exchange Fixed Yet?

Wed, 19 May 2004 13:59:30 EST

Nine months after the New York Stock Exchange executive-pay scandal erupted, two big questions hover over the institution: Has it dealt with its governance problems? Is it addressing critics who say its two-century-old “open outcry” system is obsolete? Governance does appear much improved but concerns over the trading-system remain unresolved, according to several Wharton professors. As one faculty member puts it: “What I would like to see is someone up at the top say, ‘How can we transform this to a more efficient system?’”

Who Cares About the Deficit, and Why?

Wed, 25 Feb 2004 14:34:23 EST

The numbers seem staggering: The U.S. federal budget deficit is projected to reach a record $521 billion this year, equaling about one-fourteenth of the federal debt accumulated over the nation’s history. Democrats accuse Bush and the Republican Congress of squandering the surplus achieved in the Clinton years and forcing future generations to pay for today’s spending excesses and tax cuts. But the White House and its supporters insist the deficit, while a record in dollar terms, is not so bad given the economy’s size. Is the deficit a ticking time bomb or not?

What's Ahead for 2004

Tue, 20 Jan 2004 11:08:42 EST

After a slow and confusing economic recovery, 2004 will be a year of solid improvement building on positive news, including the capture of Saddam Hussein, at the close of 2003. New technology and changing public policy, as the

United States

faces another presidential election, will also shape the business world in the coming year, predict Wharton faculty, who were interviewed by Knowledge@Wharton on five key sectors: the economy, the banking industry, airlines, telecommunications and health care.

U.S. Economy: Happy Days are Here Again � Aren't They?

Thu, 25 Mar 2004 12:50:49 EST

For investors, the three-year bear market was a dreadful hangover after the bull-market euphoria of the 1990s. But stocks took off last spring, and 2003 promises to be the first “up” year in the past four for the major indexes. Economic news has been improving. Even the job situation is getting better. Are happy times here again? Or are serious problems still embedded in the market and economy? Among the six keynote speakers at the 6^th Annual Wharton Investment Management Conference, “cautious optimism” seemed to prevail.

It's Time to Curb Abuses in Mutual Funds

Wed, 19 Nov 2003 15:50:39 EST

The $7 trillion mutual fund industry is in the biggest crisis of its history for abuses such as late trading, market timing and self-dealing by fund executives. A string of brokerages and fund families are under investigation by the Securities and Exchange Commission, the NASD and state regulators in New York and Massachusetts. A number of top fund officials have been fired or compelled to step down. Congress has begun hearings. How deep do the abuses go and what remedies are in store for the industry?

How to Restore Credibility at the NYSE

Wed, 24 Sep 2003 00:00:00 EST

New York Stock Exchange chairman Richard A. Grasso�s controversial $140 million pay package was a flash point that illuminated other issues at the Big Board and could trigger major change, including the possibility of the exchange itself going public. Conflict between the NYSE�s role as a regulator and trading exchange, flaws in the structure of its board, and concerns about whether its specialist-based trading system is fair to investors -- all these issues must be addressed before the 211-year-old exchange can regain its credibility, say Wharton faculty and other experts.

The Economic News is Good, Unless You're Looking for a Job

Wed, 10 Sep 2003 00:00:00 EST

The U.S. stock market has jumped and the economy shows signs of perking up, but Americans continue to lose jobs. Indeed, some economists warn that that many of the nearly three million jobs lost over the past three years are gone for good. What�s in store for the next three months and for 2004? While most economists and market watchers are somewhat optimistic, others suggest that the recovery won�t last.

Hurt by Hard Times, Financial Services Firms Seek New Directions

Wed, 13 Aug 2003 00:00:00 EST

After going through a tumultuous decade, the worst of the bad times may be over for the financial services industry. As the stock market rallies and corporate profits improve, a tenuous economic recovery seems to have begun -- but it could still come undone. Where are financial services firms headed? Wharton professors say that a few broad trends are taking shape and accelerating.

What's Behind the Bond Market Turmoil?

Wed, 30 Jul 2003 00:00:00 EST

Summer is supposed to be an easygoing time, but since vacation season got underway in June the bond market has been anything but laid back. Investors have grappled with steep declines in bond prices, sharply higher interest rates and confusion over the U.S. Federal Reserve's policy. Wharton finance professors and other experts say, however, that it is important to put these developments in perspective. In the months to come, they explain, interest rates will rise, especially if the economy continues to improve.

Bush's Dividend Tax Cut: Glass Half Empty or Half Full?

Wed, 04 Jun 2003 00:00:00 EST

President Bush last fall proposed eliminating the income tax that investors pay on dividends. Advocates said the move would stimulate the economy, boost stock prices and discourage the bookkeeping games and excessive borrowing that have afflicted many public companies. But the final tax-cut bill the President signed into law at the end of May was far more modest, merely reducing the dividend tax to 15%, from a high of 38.6%, for investors in the top tax bracket. Is that enough to provide the benefits advocates had predicted?

The Dollar's Weakness Is a Strength

Wed, 04 Jun 2003 00:00:00 EST

The decline of the dollar is getting everybody�s attention these days. Members of Wharton�s finance department and an economist at a U.S. financial institution say the dollar�s decline against some of the world�s major currencies will have far-reaching economic and political effects for many months to come, particularly in America and Europe. Indeed, the chain of events that the dollar�s movement has set in motion may have a lot to do with the outcome of the U.S. presidential election in 2004.

Do the Wall Street Settlements Sell Some Investors Short?

Wed, 07 May 2003 00:00:00 EST

When a tentative settlement of the two-year-old investigation of Wall Street analysts was announced last December, few market watchers thought it would have much effect on stock prices or make the financial markets substantially safer for small investors. Can investors expect more out of the final deal announced April 28? Wharton faculty and others are skeptical.

U.S.: A Drawn-Out Conflict Will Pound the Economy, Prolong the Slump

Wed, 26 Mar 2003 00:00:00 EST

Initial expectations that the war in Iraq would end quickly drove U.S. stocks up by more than 8% and sparked hopes that the three-year bear market was over. But after a weekend of discouraging news, U.S. stocks have plunged and the dollar had its biggest drop against the euro in eight months. Wharton professor Jeremy Siegel predicts that if the war ends in three or four weeks, as the markets seem to expect it will, stocks could go up by 10%. If not, watch out for more economic troubles, predict Siegel and other Wharton professors.

China Can Help the U.S. Tackle Its Social Security Crisis

Wed, 29 Jan 2003 00:00:00 EST

China and the U.S. social security system seem to be worlds apart. China is grappling with the problems of rapid industrialization with a young and vigorous population, while the U.S. is struggling with an aging population that will push current Social Security and Medicare systems to insolvency. But looks are deceiving. Wharton finance professor Jeremy J. Siegel argues that the economic growth of China and other developing countries is the only solution to the developed world�s looming pension crisis.

Coke, Quarterly Estimates and �The Numbers Game�

Wed, 29 Jan 2003 00:00:00 EST

When Coca-Cola announced in mid-December that it would end its long practice of making quarterly earnings forecasts, it looked like heresy. Practically all public companies participate in the ritual of earnings guidance. And in the post-Enron-WorldCom-Tyco era, regulators and investors are pressing for more financial disclosure, not less. What was behind Coke�s decision and is it one that other companies should emulate?

Analyzing Likely Tax Cuts in 2003: Can Bush Kickstart the Economy?

Wed, 18 Dec 2002 00:00:00 EST

When Congress returns from the holiday break, President Bush is expected to unveil his plan for using tax cuts to stimulate the economy. But would the proposals under discussion provide the kind of short-term economic boost the White House says the country needs? And will the final package constitute a new strategy, or just a continuation of the old one?

How Bush Can Avoid an Economic Meltdown

Wed, 20 Nov 2002 00:00:00 EST

The economy may not be recovering as strongly as some would like. But it is healthy enough at the moment that there is no need for the Bush administration to accelerate existing tax cuts or push for new cuts to stimulate economic activity, according to professors of finance and public policy at Wharton. They also say that the reemergence of federal budget deficits is reason enough to forego thinking about tax cuts.

What�s Wrong With Spitzer�s Solution to Analyst Bias?

Wed, 06 Nov 2002 00:00:00 EST

New York Attorney General Eliot Spitzer, the Securities and Exchange Commission and about a dozen of the largest Wall Street firms are close to settling on a billion dollar solution to the controversy over analyst bias that has raged since the dot-com meltdown two years ago. But will the settlement really resolve the conflicts of interest that caused some analysts to tout stocks they knew were no good? Is there a better approach that would solve the dilemma of how to pay for research? And, for that matter, is there still an analyst-conflict problem, or has it already been corrected? Experts on the financial markets offer their opinions.

Is That a $100 Bill Lying on the Ground? Two Views of Market Efficiency

Wed, 23 Oct 2002 00:00:00 EST

A few days before Daniel Kahneman and Vernon Smith won the Nobel Price in Economic Sciences for their research into how individuals make economic decisions, Wharton hosted a debate showcasing two views of market efficiency. The efficient-markets banner was carried by Princeton professor Burton Malkiel, author of �A Random Walk Down Wall Street,� while Richard Thaler, a professor at the University of Chicago, represented the behavioral finance camp. The debate was moderated by Wharton finance professor Jeremy Siegel.

Head: Is That a $100 Bill Lying on the Ground? Two Views of Market Efficiency

Wed, 23 Oct 2002 00:00:00 EST

The Deal Drought: IPOs and M&As are Down But Not Out

Wed, 09 Oct 2002 00:00:00 EST

The rate of financial deals has plummeted since the collapse of the late-90s economic boom. IPOs, mergers and venture funding have all seemingly evaporated, and with them thousands of financial industry jobs. But according to a number of observers, you can still find deals if you know where to look.

Bogle and Siegel on the Stock Market and Corporate Reform

Wed, 25 Sep 2002 00:00:00 EST

What will it take to restore public trust in corporate America? And what kind of stock market returns can today�s depressed investors expect over the next decade? John C. Bogle, retired founder of The Vanguard Group, suggests it will require a lot of work to get even the most modest results. Meanwhile, says Wharton finance professor Jeremy Siegel, the Federal Reserve missed an opportunity this week to cut interest rates and stimulate a stock market rally.

A Simple Solution to Stock Market Woes: Kill the Corporate Dividend Tax

Wed, 14 Aug 2002 00:00:00 EST

As stock markets continue their roller-coaster ride, the search continues for ideas that can help restore investor confidence while boosting economic growth. Jeremy Siegel, author of the best-selling book �Stocks for the Long Run,� and Andrew Metrick � both finance professors at Wharton � with Paul Gompers, a finance professor at Harvard, argue that a simple solution would be to eliminate one of the most detrimental taxes in the U.S. economy � the corporate dividend tax. Siegel, Metrick and Gompers made the case for making corporate dividends tax deductible in a recent article in the Wall Street Journal.

Jeremy Siegel on Stocks: The Worst Is Over

Wed, 31 Jul 2002 00:00:00 EST

The collapse in U.S. stock prices and the scandals in executive suites have sent waves of fear and loathing throughout capital markets around the world and caused many investors to lose faith in U.S.-style capitalism. They also have led to a decline in the dollar, forced the Bush administration to postpone a push for Social Security reform, and prompted Congress to develop new rules to curb corporate malfeasance and restore investors� confidence. But the worst is probably over, says Jeremy Siegel, Wharton finance professor and author of the best-selling book, Stocks for the Long Run.

Stocks Revisited: Siegel and Shiller Debate

Wed, 19 Jun 2002 00:00:00 EST

During the bull market of the 1990s, Wharton finance professor Jeremy Siegel�s 1994 bestseller, Stocks for the Long Run, preached the long-term benefits of stocks over bonds and cash. Then in 2000 Yale economics professor Robert Shiller warned of the risky, unpredictable nature of stocks in his own bestseller, Irrational Exuberance. With two years to test these dueling views against real market data, which holds up best?

The Merrill Lynch Settlement: Good for Merrill, Not for Investors

Wed, 05 Jun 2002 00:00:00 EST

When brokerage giant Merrill Lynch agreed last month to pay $100 million to settle the analyst bias charge brought by the New York attorney general, it was widely seen as a smart way for the firm to avoid a lengthy, image-tarnishing court case. But will the settlement, involving a number of changes in the way analysts are paid and supervised, really lead to better, more objective stock analysis on Wall Street?

A Closer Look at Helping Employees Better Manage Investment Risk

Wed, 22 May 2002 00:00:00 EST

The stock market�s recent slump and Enron�s collapse last year have focused new attention on employee exposure to equity risk, particularly in self-directed 401(k) plans. While many workers continue to view company shares and the stock market as their long-term route to retirement security, that view was challenged by participants in a recent Wharton conference on �Risk Transfers and Retirement Income Security.�

Recovery? Yes. Robust? No.

Wed, 08 May 2002 00:00:00 EST

While there is some debate over whether the economy was truly in a recession last year � gross domestic product definitely fell for one quarter but perhaps not for two � a recovery is clearly under way now. This is despite a downward trend in stocks, moderate consumer demand and a cautious approach among businesses to spending and investment.

In an Uncertain Economy, Real Estate Holds its Ground

Wed, 08 May 2002 00:00:00 EST

Developers and tenants are reining in their ambitions and not taking any chances. Still, the real estate industry has held its ground well amid the uncertainty of the slow, post-September 11 economy, according to Wharton professors and industry experts who spoke during a recent conference at Wharton�s Zell/Lurie Real Estate Center.

Taming the Renegade Analyst

Wed, 24 Apr 2002 00:00:00 EST

Critics have complained for years that Wall Street analysts don�t provide the honest �buy� and �sell� recommendations their customers expect. But now the controversy appears headed for a legal showdown that could force change at big securities firms, thanks to a set of startling e-mails recently made public in an investigation of brokerage giant Merrill Lynch. So far, however, there are differences of opinion as to what those changes should be and whether they will ever be adopted.

Accounting High Jinks and Stock Prices

Wed, 27 Feb 2002 00:00:00 EST

By now they are something of a rogues gallery, symbols of maverick accounting in the new century � Enron, Tyco, Qwest, Computer Associates, Global Crossing. Many investors worry these firms may be the tip of the iceberg, just the start of what will become a relentless parade of accounting scandals that will dampen stock market returns for months to come, perhaps years. But just how bad is the damage and what types of companies are the most affected? A trio of Wharton professors looks at the present scandals and their possible impact on future stock prices.

The New Business Reality

Wed, 30 Jan 2002 00:00:00 EST

ideas about what effect those events would have on business and the economy. It was clear, however, that even before the attacks, major changes were underway that would alter the business landscape. To help understand these changes, Wharton�s Aresty Institute of Executive Education held a three-day symposium in December called Wharton on the New Business Reality: Scenarios and Strategies for the Future. Knowledge@Wharton covered the symposium.

What�s Ahead for 2002?

Wed, 16 Jan 2002 00:00:00 EST

What�s next? Will 2002 be like 2001, with unemployment going up, stock prices going down, the trade balance worsening and tech industries in turmoil? No one knows for sure, of course. But Knowledge@Wharton asked several Wharton professors for their best predictions about issues and trends in four key economic areas: the stock market, employment, international trade and technology.

In Bush�s Economic Stimulus Package, Timing Is Key

Wed, 10 Oct 2001 00:00:00 EST

As the U.S. economy continues to feel the aftershocks of the terrorist attacks on Sept. 11, the focus now is on how to turn around the ensuing recession. The effect of President Bush�s recently proposed economic stimulus package is difficult to gauge given that consumer and corporate spending remain so unpredictable. Experts agree, however, that the timing of the stimulus will have a major impact on its success or failure.

What�s in Store for the Capital Markets and the Economy?

Wed, 26 Sep 2001 00:00:00 EST

In the two weeks since the terrorist attacks on the World Trade Center and the Pentagon on Sept. 11, stocks have been see-sawing on Wall Street, alternately plunging and rebounding day after day. Does that mean that stocks have hit the bottom? Or could they fall further? Wharton professors and industry experts say that economic uncertainty will continue even as some investors are starting to beef up their stock portfolios.

Did Terrorists Blow Up the Recovery?

Thu, 13 Sep 2001 00:00:00 EST

When airplane hijackers destroyed the World Trade Center and attacked the Pentagon on September 11, they unleashed the bloodiest terrorist attack in U.S. history. In addition, however, they also dealt a body blow to a weak global economy that already teeters on the brink of a recession. These attacks will dramatically affect consumer confidence and also have a major impact on industries such as travel and insurance. As such, the Bush administration will have to provide economic as much as political and military leadership. Wharton professors offer specific suggestions, including an immediate interest-rate cut and selective tax cuts.

This Feels Like a Slump, But Is It a Recession?

Wed, 15 Aug 2001 00:00:00 EST

When Fed policy makers meet on August 21, the question of whether they should cut interest rates again will figure high on their agenda. They have already cut interest rates six times this year to spur economic activity. But while the economic slump is a reality, is the U.S. economy officially on the brink of � or in � a recession? What will the next year look like for business? Michael Boldin, research director of Wharton Research Data Services, sought the opinion of seven top economists.

In a Slump, Charles Schwab and Merrill Lynch Seek Middle Ground

Wed, 18 Jul 2001 00:00:00 EST

Consider it a tale of two companies, each wrestling with a difficult market and, to some extent, trying to move to the middle to escape the worst of the extremes. Merrill Lynch, the country�s biggest brokerage, and its chief rival, Charles Schwab, won�t become mirror images of one another, but both are struggling to deal with one of the industry�s biggest problems: How to assure steady revenue even when investors are too fearful to trade.

The Bush Tax Bill: Complex, Confusing and Drawn Out

Wed, 06 Jun 2001 00:00:00 EST

Now that Congress has passed President Bush's $1.35 trillion tax bill, what does it all mean? Faculty members at Wharton and the Goizueta Business School at Emory University say the bill�s provisions could stimulate the sluggish economy and allow taxpayers to keep more of their income. But the bill has so many twists and turns that even London cab drivers, famed for their ability to memorize that city�s Byzantine thoroughfares, would need a map to navigate this legislative maze. And one other thing: Don�t expect the tax savings to materialize anytime soon.

Why Real Estate Is Strong Even in a Weak Economy

Wed, 23 May 2001 00:00:00 EST

When the U.S. economy went through a recession 10 years ago, commercial real estate hit the pits. Vacancy rates were high, rents were low, and the downturn was so severe that it took years for real estate to return to normal. Today, although the economy again faces a slowdown, real estate is well equipped to face it. Why? Experts at a meeting organized by Wharton�s Zell-Lurie Real Estate Center offer some answers.

Thumbs Up, or Thumbs Down, on Stocks? Siegel and Shiller Debate.

Wed, 25 Apr 2001 00:00:00 EST

Are the good times really over, or should investors expect stocks to resume their course of seemingly inevitable long-term gains? Jeremy Siegel, author of Stocks for the Long Run, and Robert Shiller, author of Irrational Exuberance, analyzed past and present trends during a debate at Wharton on April 16.

Will Stock Prices Keep Falling? Look Again at the P/E Ratio

Wed, 11 Apr 2001 00:00:00 EST

Many analysts argue that despite the carnage on Wall Street over the past year, stock prices are still high by historical standards. Is that true? Could stocks fall some more before they reach bottom? Wharton finance professor Jeremy Siegel, author of Stocks for the Long Run, suggests that benchmarks such as the price-to-earnings ratio present a more hopeful picture than many market observers believe.

Jeremy Siegel: His Bet Is Still On Stocks

Mon, 19 Mar 2001 14:05:11 EST

Despite a 4.3% drop in the S&P 500 on March 12, 2001, with losses exceeding 20% from the March 24, 2000 peak, Wharton finance professor Jeremy Siegel contends that the forces that make stocks the investor�s best long-term bet are still dependable. Siegel, author of the well-known book Stocks for the Long Run, sees �a resurgence of the traditional tools used to value equities� � earnings and cash flow.

U.S. Economic Outlook: Unclear, but Keep Lowering Those Interest Rates

Wed, 31 Jan 2001 16:24:30 EST

The U.S. Federal Reserve lowered the federal funds target rate on January 3. Stocks surged. Then they plunged. Then they rose a little. A further rate reduction may come on Jan 30. Or it may not. Are we most worried about consumer confidence, corporate spending, the stock market, the technology sector, the telecom sector, the spread on high-yield bonds, or all of the above? Wharton professors offer some thoughts.

Dot-Coms: Down But Not Out

Mon, 16 Oct 2000 07:57:49 EST

Given the dozens of Internet companies that have gone belly up this year, what�s the prognosis for the future of the Net economy? On Oct. 4, Knowledge@Wharton and CNET News.com co-sponsored a panel in San Francisco titled �Dot-Coms: Down and Out?� moderated by Wharton finance professor Jeremy Siegel. The panelists, including Henry Blodget, Ann Winblad, Thomas McManus, Michael Cohen and Mark Goldstein, offered perspective, predictions and advice for both e-entrepreneurs and e-investors.

Stock Market Whiplash: How Bad is the Burn?

Wed, 26 Apr 2000 13:34:19 EST

The movement of stocks in the past few weeks, especially that of the NASDAQ Composite Index, has been so contorted you half expect investors to rush to their doctors complaining of whiplash. The NASDAQ declined more than 25% in five days, a fall that culminated on April 14 with the index�s biggest-ever one-day point plunge. Then, just when it looked like Wall Street�s raging bull had morphed into a vengeful bear, on April 17 and 18, the NASDAQ snapped back with its biggest two-day gain ever. On April 25 and 26, the roller coaster continued, first down then up. To explore the reasons for the volatility and to gauge the outlook for the market, Knowledge@Wharton talked with Wharton finance professors Marshall Blume and Jeremy Siegel, and David Pottruck, president and co-chief executive officer of Charles Schwab.

Microsoft and the Judge: Round II

Tue, 25 Apr 2000 14:25:15 EST

After his findings of fact last fall that Microsoft was a predatory monopoly, it came as no surprise to most when U.S. District Judge Thomas Penfield Jackson ruled last week that the company had indeed violated antitrust laws. Now, though, comes the hard part: What should be done about it? As the case wends its way through the judicial system, the implications for the company, its competitors and its customers could be far-reaching. Or the impact on Microsoft might turn out to be minimal. Nothing will be clear until the company reaches a settlement with the government or the judge imposes remedies, according to four Wharton faculty members.

Greenspan vs. Inflation: A Debate

Tue, 21 Mar 2000 17:03:52 EST

When Alan Greenspan frets, people take notice. The Federal Reserve chairman attracted widespread interest with recent comments about productivity increases being a potential harbinger of inflation. His line of thinking runs thus: Gains in productivity can lead investors to believe that corporate earnings will continue to grow. Stock prices are bid up, thus increasing the �wealth effect.� If people feel they will have more money in the future, they consume more today, and may take on a lot of debt in doing so. If demand outstrips supply, prices can shoot up. Is Greenspan right to be worried? Should the Fed continue to raise rates? Are those high-flying technology stocks headed for a come-uppance? To find out, Knowledge@Wharton interviewed three members of Wharton�s finance department and a well-known investment strategist.

Dow 36,000: Future or Fiction?

Wed, 27 Oct 1999 14:38:21 EST

The sustained boom on Wall Street has recently resulted in a spate of books with such titles as Dow 36,000, Dow 40,000 and even Dow 100,000. Coupled with euphoria over the coming of the Internet age, such monikers sometimes suggest that the stock market will keep soaring into the stratosphere well into the next millennium. But how realistic is it to believe that the Dow Jones Industrial Average, arguably the best-known yardstick of Wall Street�s performance, will keep defying gravity? Jeremy Siegel, professor of finance at Wharton and author of the well-known book Stocks for the Long Run, recently discussed these issues with Kevin A. Hassett, an economist at the American Enterprise Institute and co-author with James Glassman of Dow 36,000: The New Strategy of Profiting from the Coming Rise in the Stock Market.

Dow 10,000 Should Not Alter Anyone�s Plans

Mon, 24 May 1999 16:56:11 EST

After months of anticipation, on March 30 the Dow Jones Industrial Average closed at more than 10,000 for the first time in history. On April 2, Jeremy Siegel, professor of finance at Wharton and author of Stocks for the Long Run, spoke to Knowledge @ Wharton and analyzed the implications for investors.