Still Bullish After All These Years

Jeremy Siegel has never lacked enthusiasm for the market.

Even nine years into one of the strongest stock market recoveries in history, “this bull market is not over yet,” said Siegel, who has been a University of Pennsylvania finance professor since 1976.

That should not come as a surprise. His 1994 book, “Stocks for the Long Run,” helped cement the conventional wisdom that stocks are a better bet for long-term investors than other popular investments such as bonds and gold.

Siegel’s timing couldn’t have been better. A year after his book appeared, U.S. stocks went on an epic run. The S&P 500 Index more than tripled from 1995 to 1999.

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Show Me the Money

Remember: Stock rallies are ultimately dependent on corporate earnings growth. As Ben Graham, the father of security analysis, reputedly said, “In the short run the market is a voting machine, but in the long run it’s a weighing machine.”

What the market weighs is earnings.

So how to assess “abnormal items” (such as merger costs, natural disasters, one-time sales, or any other unusual event) that skew earnings?

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