In this market, value names are the place to be, according to Wharton Business School professor emeritus Jeremy Siegel. The long-term investor is staying in the market and says the recent environment has provided a good opportunity. “For young people with cash, I think this is a great time to come in,” Siegel said on CNBC’s ” Squawk Box ” Tuesday. Volatility has been a major theme for the stock market this year, with the S & P 500 down about 20% so far in 2022. The tech sector, once a high flier, has been particularly hard hit. The tech-heavy Nasdaq has lost nearly 30% year to date. Siegel sees the momentum continuing for value stocks , which he said are trading for 12 or 13 times earnings. In comparison, the S & P 500 has a price-to-earnings ratio of 17, according to FactSet. The key is to stay diversified, instead of focusing on specific sectors, he noted. “The swing that we saw still has a way to go away from the tech, more towards dividend paying, more towards those value investments in 2023,” Siegel said. What could derail markets is the Federal Reserve continuing its aggressive rate hikes into next year, he said. The central bank is expected to raise rates by 75 basis points next week in an effort to combat inflation. “What scares the market the most is the Fed is going to stay this tight through 2023, which I absolutely think would be really a disaster for the economy,” he said. In fact, Siegel said he expects the Fed’s interest rate increases are already making an impact on inflation. “There is going to be a pivot soon,” Siegel said of Fed policymakers. While he still expects there will be a 75 basis point hike next week, he’s anticipating some language that could indicate the Fed may slow down. “I think they are going to acknowledge that there has been a tremendous amount of progress made on inflation,” he said.
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