It comes down to apples to oranges but I much prefer the oranges to Professor Siegel's apples because he uses forward earnings estimates and they are notoriously unreliable.
Jeremy Siegel's Mistake: Why Stocks Are NOT "Dirt Cheap"
Yesterday, we noted that Wharton professor Jeremy Siegel's "fair value" estimate for the S&P 500 is a startling 1380, which is about 40% higher than most other estimates (Robert Shiller, Jeremy Grantham, Andrew Smithers, John Hussman, et al). Prof Siegel, who is now a pitch man for WisdomTree funds, uses this estimate to conclude that stocks are "dirt cheap."
The other experts, meanwhile, who use a consistent, historically predictive, and fully explained methology, estimate that fair value is around 900-1000, about where we are now. In their view, stocks are just fairly valued.
So who's right?
Friday, November 7, 2008
Why stocks maybe are not cheap
from Clusterstock an interesting blog run by the once infamous Henry Blodgett.