Jeremy Siegel, a professor at the Wharton School of the University of Pennsylvania, predicted that the Dow Jones index would surpass the 20,000 mark. And he was right. It now says that the coming year could be very favourable for equities. And he puts forward three strong arguments.
Rising money supply, vaccine within reach and closer than expected US election results. Both presidential and congressional. According to Siegel, these are the three main factors that should cause the stock to continue to strengthen next year. “On all three fronts, we’re working to make 2021 a very good year,” Siegel said in an interview with CNBC.
The market is simply flooded with liquidity. U.S. money supply as measured by M1 (cash and current bank accounts) has increased by 44 percent since March this year. So quickly the amount of money in circulation never grew in the postwar era. In addition, interest rates are practically close to zero around the world, so investors are looking for a better opportunity to appreciate their capital. And stocks offer that opportunity. Moreover, hopes of an early launch of the coronavirus vaccine and the outcome of the US election will only improve investor sentiment, according to Siegel.