Last week our Behind the Market’s podcast had a great guest to discuss the big news of the week: the Dow Jones Industrial Average passed the 20,000 mark for the first time. Both Wharton Professor Jeremy Siegel, our co-host, and Tobias M. Levkovich, Chief U.S. Equity Strategist for Citi Research, weighed in on the prospects for equity gains in 2017.
U.S. Markets Bull vs. Bull:
• Professor Siegel had the more bullish bias in terms of potential gains—but he also had a bigger caveat and hesitation based on fears of global trade rhetoric from Trump.
• I pushed Professor Siegel on whether trade wars could really be a problem—or whether there are some really important issues Trump might be focused on that have some common-sense appeal and will turn out OK.
• Levkovich was bullish on the market and has a model that assigns a fairly high probability of good market gains this year. But his model points to more modest gains, perhaps around 10% total returns for 2017.
• Cyclical bias: Levkovich also has a cyclical bias in terms of where he allocates, and we discussed those sectors he likes.
• We further discussed sentiment for the market, volatility models and the great rotation from bonds to equities that Levkovich believes is going to be a catalyst for the markets
China: Bull vs. Bear
We also had a second guest on the program: Brian Neider of Lead Edge Capital. Neider is a growth equity investor who focuses on private markets in software and Internet companies, with some public company exposure. I saw Jim Chanos at the Evidence-Based Investing conference in New York last year, where he presented a case to be short Alibaba. Neider’s firm has been a major investor in Alibaba over the last five or six years, and they remain bullish.
I would note: this year China has been a surprising stand-out in performance, as we’ll soon discuss in a blog post, and Alibaba’s earnings beat many expectations last week. For those looking for a review of various types of exposure that go beyond the public markets, Neider does a nice job of outlining the industry and his firm’s place in it.
Important Risks Related to this ArticleInvestments focused in China increase the impact of events and developments associated with the region, which can adversely affect performance.