Economist Jeremy Siegel warned investors Monday against excessive market enthusiasm this month, saying that the coming few weeks could disappoint.
Equities remain strong, lifted by a decline in real yields, he said, noting that the yield on 10-year Treasury inflation-protected securities, or TIPS, is now below 2%. However, "valuations are not cheap," the WisdomTree senior economist and Wharton School finance professor emeritus wrote in his weekly commentary.
"December traditionally delivers strong performance, but when consensus becomes too confident in a 'Santa Claus rally,' markets have a habit of surprising. Investors should be careful from becoming overexuberant in December. I could see a muted and rather disappointing next few weeks, while a better Q1 if economic conditions hold steady. Of course, 2025 is unlikely to be as strong a market as we had in 2023 and 2024," Siegel said.
Strong economic data and growing clarity on Federal Reserve policy have produced "a consensus view for a strong market that is now well reflected in positioning," he wrote.
