We’re only in the bull market's 4th inning: Siegel

On Tuesday's episode of "Futures Now," the Wharton finance professor didn't just argue that stocks are cheap. He proclaimed that the Dow Jones industrial average will rise to his "fair market value" estimation of 18,000—10 percent above current levels—as companies continue to perform better and better.

 "I'm a bull, and I can't believe what S&P is putting out for earnings estimates in 2014," he said. "Operating earnings 2013 over 2012 were up 10.6 percent; S&P reported earnings were up 16 percent from last year. They're expecting reported earnings to be up 20 percent this year. We didn't have a real good economy last year, and we got 16 percent earnings growth. 

"If any of these earnings estimates pan out—and they are bullish—hey, we're in about the fourth or fifth inning of this bull market," Siegel added. "This could be ... much more than 18,000 on the Dow.

DYI Comments:  When it comes to the stock market anything can happen.  Here at DYI I weigh the odds both using math and historical valuation.  It is highly unlikely that we are only in the 4th inning most likely in 8th or 9th.  Jeremy Siegel has always been an optimistic guy and a well known perma-bull so nothing new there.  As the market gets closer and closer to the top interviews and bullish articles will increase in intensity until a super consensus is formed.  At that time caution will be thrown to the wind the top will be put in and after that there is no other direction to go but down.

Moneychimp.com has a inter-active site for determining the future returns of the market.  Using the current Shiller PE10 of 26, corporate profits growing on average 5% and current dividend yield of 1.9% the estimated 10 year average annual return for money invested today is 1.92%.  I agree with that assessment. Very difficult to launch a 4th inning bull market starting with those dismal returns.

DYI