Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Topic Author
invest2bfree
Posts: 239
Joined: Sun Jan 12, 2020 9:44 am

Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by invest2bfree »

This is an eye opening interview with Jerey Seigel on CNBC.

https://youtu.be/t3ygJbJjocI

If this comes true we will see fixed income being crushed. Do we sell all your bonds?


The bigger question is how will this temporary money printing work against long term deflationary forces like technology, outsourcing and demographics?
Last edited by invest2bfree on Sat May 15, 2021 11:05 am, edited 1 time in total.
1/3rd VTI, 1/3rd VXUS, 1/3rd EDV 401k: 1/3rd FZILX, 1/3rd FZROX and 1/3rd FNBGX
jebmke
Posts: 12918
Joined: Thu Apr 05, 2007 2:44 pm
Location: Delmarva Peninsula

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by jebmke »

invest2bfree wrote: Sat May 15, 2021 10:57 am Do we sell all your bonds? BTW I don't have any.
So, since you have no bonds you want to sell mine?
When you discover that you are riding a dead horse, the best strategy is to dismount.
Topic Author
invest2bfree
Posts: 239
Joined: Sun Jan 12, 2020 9:44 am

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by invest2bfree »

jebmke wrote: Sat May 15, 2021 10:58 am
invest2bfree wrote: Sat May 15, 2021 10:57 am Do we sell all your bonds? BTW I don't have any.
So, since you have no bonds you want to sell mine?
I take it back, I do hold 5% in VGSH as my emergency funds.
1/3rd VTI, 1/3rd VXUS, 1/3rd EDV 401k: 1/3rd FZILX, 1/3rd FZROX and 1/3rd FNBGX
KlangFool
Posts: 21007
Joined: Sat Oct 11, 2008 12:35 pm

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by KlangFool »

invest2bfree wrote: Sat May 15, 2021 10:57 am This is an eye opening interview with Jerey Seigel on CNBC.

https://youtu.be/t3ygJbJjocI

If this comes true we will see fixed income being crushed. Do we sell all your bonds? BTW I don't have any.


The bigger question is how will this temporary money printing work against long term deflationary forces like technology, outsourcing and demographics?
invest2bfree,

1) The prediction may not be true.

2) Even if the prediction is true, how would you know the stock will not be crushed?

<<If this comes true we will see fixed income being crushed.>>

3) Ditto, even if the prediction is true, how would you know that the bond will be crushed?

4) Please explain how would you know the above to be true?

5) If you know this, so does everyone else. Why won't they priced in the inflation for the bond that they issued and buy? So, why would the bond's price change if the information had been priced in?

I know that I know nothing.

<<BTW I don't have any.>>

It is a bad idea to put all your eggs in one basket. It is a bad idea to assume that you can predict the future.

KlangFool
40% VWENX | 12.5% VFWAX/VTIAX | 11.5% VTSAX | 16% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 40% Wellington 40% 3-funds 20% Mini-Larry
Topic Author
invest2bfree
Posts: 239
Joined: Sun Jan 12, 2020 9:44 am

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by invest2bfree »

"If you know this, so does everyone else. Why won't they priced in the inflation for the bond that they issued and buy? So, why would the bond's price change if the information had been priced in?"

Have you heard a term called QE it has been discussed around here.

Imagine if you are buyer of 1.2 Trillion in Bonds would anybody step in front of you?

If not for Fed intervention bonds would be 5% and stock could be crashing.
1/3rd VTI, 1/3rd VXUS, 1/3rd EDV 401k: 1/3rd FZILX, 1/3rd FZROX and 1/3rd FNBGX
Seasonal
Posts: 2785
Joined: Sun May 21, 2017 1:49 pm

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by Seasonal »

invest2bfree wrote: Sat May 15, 2021 11:09 am "If you know this, so does everyone else. Why won't they priced in the inflation for the bond that they issued and buy? So, why would the bond's price change if the information had been priced in?"

Have you heard a term called QE it has been discussed around here.

Imagine if you are buyer of 1.2 Trillion in Bonds would anybody step in front of you?

If not for Fed intervention bonds would be 5% and stock could be crashing.
What is the average daily volume of bond trades? What is the average daily volume of Fed purchases?
MoonOrb
Posts: 1110
Joined: Thu Jan 24, 2013 6:58 pm

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by MoonOrb »

I just accept that as part of my investing approach that of course there will be times that bonds will be hammered, but I'm not really sure when this is going to be. Maybe it will be in the next three years. Maybe it won't be in the next three years. I've given up on trying to figure out when these types of things are going to happen. My approach does not call for me to avoid being in certain asset classes just because they will go down some of the time. My approach is to remain in these asset classes all of the time--this is the way I'm assured of getting the benefit of the growth.
mmcmonster
Posts: 539
Joined: Sun Jan 12, 2014 1:18 pm

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by mmcmonster »

invest2bfree wrote: Sat May 15, 2021 11:09 am "If you know this, so does everyone else. Why won't they priced in the inflation for the bond that they issued and buy? So, why would the bond's price change if the information had been priced in?"

Have you heard a term called QE it has been discussed around here.

Imagine if you are buyer of 1.2 Trillion in Bonds would anybody step in front of you?

If not for Fed intervention bonds would be 5% and stock could be crashing.
According to Wikipedia,
QE1 - 11/2008 - 6/2010
QE2 - 11/2010 - Second Quarter 2011
QE3 - 9/2012 - 2013
QE4 - 9/2019 - ???

I'm still waiting for the rampant inflation from QE1. :beer

I know that I know nothing and continue buying stocks and bonds, aiming for 40% bonds. Started adding TIPS to my bond allocation.
Beehave
Posts: 949
Joined: Mon Jun 19, 2017 12:46 pm

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by Beehave »

KlangFool wrote: Sat May 15, 2021 11:05 am
invest2bfree wrote: Sat May 15, 2021 10:57 am This is an eye opening interview with Jerey Seigel on CNBC.

https://youtu.be/t3ygJbJjocI

If this comes true we will see fixed income being crushed. Do we sell all your bonds? BTW I don't have any.


The bigger question is how will this temporary money printing work against long term deflationary forces like technology, outsourcing and demographics?
invest2bfree,

1) The prediction may not be true.

2) Even if the prediction is true, how would you know the stock will not be crushed?

<<If this comes true we will see fixed income being crushed.>>

3) Ditto, even if the prediction is true, how would you know that the bond will be crushed?

4) Please explain how would you know the above to be true?

5) If you know this, so does everyone else. Why won't they priced in the inflation for the bond that they issued and buy? So, why would the bond's price change if the information had been priced in?

I know that I know nothing.

<<BTW I don't have any.>>

It is a bad idea to put all your eggs in one basket. It is a bad idea to assume that you can predict the future.

KlangFool
+1
There are lots of known strong, countervailing forces at play. Add to that the unknown surprises that can come into being and it makes predicting (and especially predicting with timing) at very best an educated guess. So I'm in agreement with KlangFool about the danger of putting all eggs in one basket.

That said, I am concerned about inflation. One thing I'll be watching for in that regard is the payout ratios for annuities. If inflation causes a rise in interest rates and a corresponding rise in annuity payouts, then I may well spring for one.
Ron
Posts: 6765
Joined: Fri Feb 23, 2007 7:46 pm
Location: Allentown–Bethlehem–Easton, PA-NJ Metropolitan Statistical Area

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by Ron »

Could be,
Might be,
May be,
,,,,,,,,,,,,,,,,

Nobody knows nothing 🥴 ...

- Ron
User avatar
abuss368
Posts: 25019
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by abuss368 »

I can’t do anything about it! No body knows nuttin!

I will stay the course!

Tony
John C. Bogle: “Simplicity is the master key to financial success."
New Providence
Posts: 555
Joined: Fri Mar 27, 2020 7:10 am

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by New Providence »

What it would be valuable here is for Siegel to show his before/after portfolio.

First, show the composition of his investments, then prediction of 20% inflation, second changes to his portfolio to reflect adjustments based on his prediction.

Otherwise, for all we know he makes this predictions but he in fact stays the course!
Broken Man 1999
Posts: 6305
Joined: Wed Apr 08, 2015 11:31 am
Location: West coast of Florida, inland on high ground!

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by Broken Man 1999 »

Time will tell. In the meantime I take solace in the fact I have an investment that provides some protection from inflation, I-bonds.

Personally I don't believe we will see 20% inflation, if we do, so be it. Inflation has been predicted for so long, with little accuracy, it seems foolish to worry about it every time it is mentioned.

One day the prediction of high inflation might come true. Since I don't know when, I'll just continue maintaining our present AA. We have a bunch of equity holdings (55%), we have a bunch of bond holdings (45%). Not sure what would be a better portfolio than what we currently have.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven then I shall not go." - Mark Twain
SuperXmas
Posts: 104
Joined: Thu Dec 31, 2020 11:53 pm

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by SuperXmas »

That is an outrageous claim
KlangFool
Posts: 21007
Joined: Sat Oct 11, 2008 12:35 pm

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by KlangFool »

invest2bfree wrote: Sat May 15, 2021 11:09 am "If you know this, so does everyone else. Why won't they priced in the inflation for the bond that they issued and buy? So, why would the bond's price change if the information had been priced in?"

Have you heard a term called QE it has been discussed around here.

Imagine if you are buyer of 1.2 Trillion in Bonds would anybody step in front of you?

If not for Fed intervention bonds would be 5% and stock could be crashing.
invest2bfree,

Here we go again. If YOU know this, so does everyone else. Everyone else would priced that in their purchase of stock and bond. Hence, it is reflected in the market price of the stock and the bond.

What do you know that NO ONE ELSE know? And, if you do know something, you would be VERY RICH. There is no reason to post anything at the forum.

I know that I know nothing.

KlangFool
40% VWENX | 12.5% VFWAX/VTIAX | 11.5% VTSAX | 16% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 40% Wellington 40% 3-funds 20% Mini-Larry
NiceUnparticularMan
Posts: 2305
Joined: Sat Mar 11, 2017 7:51 am

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by NiceUnparticularMan »

So personally, we have never owned nominal bonds, and I do think they are riskier than some people seem to realize.

That said, once you have committed to a long term allocation plan, staying the course is critical, and trying to time the markets can be a disaster.

So, my two cents is if you already have bonds per plan, you should now stay the course. And if you are supposed to rebalance to bonds if they fall in portfolio percentage, then do that too.
whereskyle
Posts: 1727
Joined: Wed Jan 29, 2020 10:29 am

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by whereskyle »

invest2bfree wrote: Sat May 15, 2021 10:57 am This is an eye opening interview with Jerey Seigel on CNBC.

https://youtu.be/t3ygJbJjocI

If this comes true we will see fixed income being crushed. Do we sell all your bonds?


The bigger question is how will this temporary money printing work against long term deflationary forces like technology, outsourcing and demographics?
The answer is absolutely not. Short-term treasuries, and even intermediate-term treasuries, performed admirably in the hyperinflation of the 1970s.

They handily outperformed the US stock market from 1973-1979, and they nearly kept pace with inflation in this most devastating hyper inflationary period.

The answer is to stay the course and tune out the noise.
Last edited by whereskyle on Sat May 15, 2021 1:41 pm, edited 1 time in total.
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
User avatar
JoeRetire
Posts: 8340
Joined: Tue Jan 16, 2018 2:44 pm

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by JoeRetire »

invest2bfree wrote: Sat May 15, 2021 10:57 amDo we sell all your bonds?
Who is we? You think I would let you sell even some of my bonds, never mind all of them?

I always love headlines that use the term "could". The are never wrong! Inflation could be 712% in the next few minutes!

Another fun phrase is "up to". Guaranteed to return up to 348% on your investments!
Just remember: it's not a lie if you believe it.
jebmke
Posts: 12918
Joined: Thu Apr 05, 2007 2:44 pm
Location: Delmarva Peninsula

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by jebmke »

JoeRetire wrote: Sat May 15, 2021 1:41 pm
invest2bfree wrote: Sat May 15, 2021 10:57 amDo we sell all your bonds?
Who is we? You think I would let you sell even some of my bonds, never mind all of them?

I always love headlines that use the term "could". The are never wrong! Inflation could be 712% in the next few minutes!

Another fun phrase is "up to". Guaranteed to return up to 348% on your investments!
If you use "up to" and "at least" in the same paragraph, you are covered.
When you discover that you are riding a dead horse, the best strategy is to dismount.
User avatar
nisiprius
Advisory Board
Posts: 43794
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by nisiprius »

invest2bfree wrote: Sat May 15, 2021 10:57 am...If this comes true we will see fixed income being crushed. Do we sell all your bonds?
If inflation is the concern, then the rational response is not to abandon fixed income, but to make sure most of your fixed income is inflation-linked fixed income. Most of my fixed income is in TIPS funds and series I savings bonds, and this isn't any recent maneuver on my part, I've been heavy in TIPS ever since they were introduced.

If inflation reached 20% per year, then it is possible that TIPS bonds and series I savings bonds might outperform stocks.

Is it really possible for TIPS to outperform stocks?

Yes, we know it's possible because it has actually happened--during 2000-2009. For example, as shown here, the American Century Inflation-Adjust Bonds Fund beat inflation, while the Vanguard Total Stock Market Index Fund did not.

Source

Image

Even with nominal bonds, if inflation reaches 20% per year, than, certainly, bonds bought today with 1% or 2% coupons will be crushed, but newly issued bonds may not be. The 10-year Treasury rate hit 15.84% in 1981.
Last edited by nisiprius on Sat May 15, 2021 1:55 pm, edited 1 time in total.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
marcopolo
Posts: 4363
Joined: Sat Dec 03, 2016 10:22 am

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by marcopolo »

invest2bfree wrote: Sat May 15, 2021 11:09 am "If you know this, so does everyone else. Why won't they priced in the inflation for the bond that they issued and buy? So, why would the bond's price change if the information had been priced in?"

Have you heard a term called QE it has been discussed around here.

Imagine if you are buyer of 1.2 Trillion in Bonds would anybody step in front of you?

If not for Fed intervention bonds would be 5% and stock could be crashing.
I am confused by your response to KlangFool's observation that all the things you pointed out earlier are well known and priced in.
Are you suggesting that QE is something other people have not heard about, so it might not already be priced in as KlangFool suggest?!?
Once in a while you get shown the light, in the strangest of places if you look at it right.
rockstar
Posts: 1824
Joined: Mon Feb 03, 2020 6:51 pm

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by rockstar »

I'd rather own bonds at double digit inflation than equities. But I'd rather own short term bonds that I would continue to roll over. Of course, if I can get a 30 year bond at 12%, I'd sell all of my equities and just own that.
User avatar
Marmot
Posts: 475
Joined: Sun Oct 10, 2010 1:44 pm
Location: Phoenix, AZ

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by Marmot »

MoonOrb wrote: Sat May 15, 2021 11:20 am I just accept that as part of my investing approach that of course there will be times that bonds will be hammered, but I'm not really sure when this is going to be. Maybe it will be in the next three years. Maybe it won't be in the next three years. I've given up on trying to figure out when these types of things are going to happen. My approach does not call for me to avoid being in certain asset classes just because they will go down some of the time. My approach is to remain in these asset classes all of the time--this is the way I'm assured of getting the benefit of the growth.
Yes!
Marty....don't go to the year 2020....Dr. Emmett Brown
z3r0c00l
Posts: 2408
Joined: Fri Jul 06, 2012 11:43 am
Location: NYC

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by z3r0c00l »

I would be shocked to see such severe inflation but am prepared for it, my non-stock money is mostly in I bonds right now.
100% Global Stocks / Ibond Emergency Fund
User avatar
Godot
Posts: 611
Joined: Fri Jun 08, 2018 3:44 pm
Location: Little Beirut

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by Godot »

nisiprius wrote: Sat May 15, 2021 1:50 pm
invest2bfree wrote: Sat May 15, 2021 10:57 am...If this comes true we will see fixed income being crushed. Do we sell all your bonds?
If inflation is the concern, then the rational response is not to abandon fixed income, but to make sure most of your fixed income is inflation-linked fixed income. Most of my fixed income is in TIPS funds and series I savings bonds, and this isn't any recent maneuver on my part, I've been heavy in TIPS ever since they were introduced.
Nisiprius: Do you own ACITX? If not, may I ask what TIPS funds you own or consider to be a rational addition to one's fixed income at this time?
"If by Godot I had meant God I would have said God, and not Godot." | ― Samuel Beckett
Topic Author
invest2bfree
Posts: 239
Joined: Sun Jan 12, 2020 9:44 am

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by invest2bfree »

marcopolo wrote: Sat May 15, 2021 1:55 pm
invest2bfree wrote: Sat May 15, 2021 11:09 am "If you know this, so does everyone else. Why won't they priced in the inflation for the bond that they issued and buy? So, why would the bond's price change if the information had been priced in?"

Have you heard a term called QE it has been discussed around here.

Imagine if you are buyer of 1.2 Trillion in Bonds would anybody step in front of you?

If not for Fed intervention bonds would be 5% and stock could be crashing.
I am confused by your response to KlangFool's observation that all the things you pointed out earlier are well known and priced in.
Are you suggesting that QE is something other people have not heard about, so it might not already be priced in as KlangFool suggest?!?
There is no pricing in QE, Fed is not a market participant. They are market manipulators.

Can you imaging somebody who has unlimited firepower taking other side of the trade?
1/3rd VTI, 1/3rd VXUS, 1/3rd EDV 401k: 1/3rd FZILX, 1/3rd FZROX and 1/3rd FNBGX
Topic Author
invest2bfree
Posts: 239
Joined: Sun Jan 12, 2020 9:44 am

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by invest2bfree »

rockstar wrote: Sat May 15, 2021 1:56 pm I'd rather own bonds at double digit inflation than equities. But I'd rather own short term bonds that I would continue to roll over. Of course, if I can get a 30 year bond at 12%, I'd sell all of my equities and just own that.
With the amount of debt outstanding it is not possible to have interest rates go up. Fed is going to be the last man standing absorbing all the money printing from the treasury.

Will the dollar be hit as Stanley Druckenmiller is pointing out remains to be seen.
1/3rd VTI, 1/3rd VXUS, 1/3rd EDV 401k: 1/3rd FZILX, 1/3rd FZROX and 1/3rd FNBGX
Candor
Posts: 486
Joined: Sat May 28, 2011 4:25 pm

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by Candor »

He's not saying 20% per year. He's saying 20% over 3 years so 6+% per year.
Time is your friend, impulse is your enemy. - John C. Bogle
marcopolo
Posts: 4363
Joined: Sat Dec 03, 2016 10:22 am

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by marcopolo »

invest2bfree wrote: Sat May 15, 2021 2:24 pm
marcopolo wrote: Sat May 15, 2021 1:55 pm
invest2bfree wrote: Sat May 15, 2021 11:09 am "If you know this, so does everyone else. Why won't they priced in the inflation for the bond that they issued and buy? So, why would the bond's price change if the information had been priced in?"

Have you heard a term called QE it has been discussed around here.

Imagine if you are buyer of 1.2 Trillion in Bonds would anybody step in front of you?

If not for Fed intervention bonds would be 5% and stock could be crashing.
I am confused by your response to KlangFool's observation that all the things you pointed out earlier are well known and priced in.
Are you suggesting that QE is something other people have not heard about, so it might not already be priced in as KlangFool suggest?!?
There is no pricing in QE, Fed is not a market participant. They are market manipulators.

Can you imaging somebody who has unlimited firepower taking other side of the trade?
I can imagine it because it has been going on for more than a decade.
Once in a while you get shown the light, in the strangest of places if you look at it right.
User avatar
anon_investor
Posts: 7057
Joined: Mon Jun 03, 2019 1:43 pm

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by anon_investor »

z3r0c00l wrote: Sat May 15, 2021 2:14 pm I would be shocked to see such severe inflation but am prepared for it, my non-stock money is mostly in I bonds right now.
+1. I Bonds would do nicely in that environment.
JBTX
Posts: 8227
Joined: Wed Jul 26, 2017 12:46 pm

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by JBTX »

Did he specifically predict 20% cpi inflation, or was he referring to inflation in real assets?
User avatar
willthrill81
Posts: 25278
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by willthrill81 »

Candor wrote: Sat May 15, 2021 2:38 pm He's not saying 20% per year. He's saying 20% over 3 years so 6+% per year.
Good point, though that would still result in big real losses for bonds, by bond standards at least.
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
User avatar
willthrill81
Posts: 25278
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by willthrill81 »

JBTX wrote: Sat May 15, 2021 2:45 pm Did he specifically predict 20% cpi inflation, or was he referring to inflation in real assets?
Rarely do people apply the term 'inflation' to real assets (e.g., stocks, real estate).
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
Ron
Posts: 6765
Joined: Fri Feb 23, 2007 7:46 pm
Location: Allentown–Bethlehem–Easton, PA-NJ Metropolitan Statistical Area

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by Ron »

Candor wrote: Sat May 15, 2021 2:38 pmHe's not saying 20% per year. He's saying 20% over 3 years so 6+% per year.
Which a bit above the early prognostications for SS COLA next year:

https://www.thinkadvisor.com/2021/05/12 ... s%20League.

- Ron
mbasherp
Posts: 616
Joined: Mon Jun 26, 2017 8:48 am

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by mbasherp »

Candor wrote: Sat May 15, 2021 2:38 pm He's not saying 20% per year. He's saying 20% over 3 years so 6+% per year.
Thank you. Everyone seems to be missing this.

It’s not much different at all from what he’s been saying since the CARES act was passed. They’ll inflate it away… a couple years of 4-5% changes the whole deficit picture.

I happen to agree. But no one knows for sure.
User avatar
avenger
Posts: 914
Joined: Mon Dec 02, 2013 12:11 pm

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by avenger »

Maybe an unpopular opinion: I feel like click bait such as this should be locked in this forum.
cheers ... -Mark | "Our life is frittered away with detail. Simplify. Simplify." -Henry David Thoreau | [VTI, VXUS, VWITX, SV fund]
SuperXmas
Posts: 104
Joined: Thu Dec 31, 2020 11:53 pm

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by SuperXmas »

mbasherp wrote: Sat May 15, 2021 3:00 pm
Candor wrote: Sat May 15, 2021 2:38 pm He's not saying 20% per year. He's saying 20% over 3 years so 6+% per year.
Thank you. Everyone seems to be missing this.

It’s not much different at all from what he’s been saying since the CARES act was passed. They’ll inflate it away… a couple years of 4-5% changes the whole deficit picture.

I happen to agree. But no one knows for sure.
Still an outrageous claim
Robot Monster
Posts: 2524
Joined: Sun May 05, 2019 11:23 am
Location: New York

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by Robot Monster »

invest2bfree wrote: Sat May 15, 2021 2:28 pm
rockstar wrote: Sat May 15, 2021 1:56 pm I'd rather own bonds at double digit inflation than equities. But I'd rather own short term bonds that I would continue to roll over. Of course, if I can get a 30 year bond at 12%, I'd sell all of my equities and just own that.
With the amount of debt outstanding it is not possible to have interest rates go up. Fed is going to be the last man standing absorbing all the money printing from the treasury.
J.Powell: "We understand our job we will do our job and we are focused as you seen for many years We have been focused on inflation "deviating" below 2%, and we used our tools aggressively to put it back up at 2% if we do see inflation moving materially above 2% persistent way the risks of inflation expectation drifting up then we will use our tools to guide inflation and expectation back down to 2% no one should doubt that we will do that this is not what we expect but no one should doubt that in the event we will be prepared to use our tools."
YouTube video link
Begins at the 4:30 mark.

Edit: Also...
"Siegel believes inflation will surge a bracing 20% over the next three or four years. That means it could be as high as 6.7% annually during that span...Siegel predicted that the Federal Reserve, which has held short-term rates near zero and says it intends to do so for the next two years, will end up hiking them later in 2021."
Last edited by Robot Monster on Sat May 15, 2021 3:18 pm, edited 1 time in total.
"I think we may see a return to full employment next year." -- Janet Yellen, March 23rd 2021
User avatar
willthrill81
Posts: 25278
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by willthrill81 »

avenger wrote: Sat May 15, 2021 3:02 pm Maybe an unpopular opinion: I feel like click bait such as this should be locked in this forum.
What do you think makes it 'click bait'?

Siegel certainly isn't the average Joe Blow hack writing financial 'reporter'. He's one of the most brilliant minds in the finance space, though neither he nor anyone else is infallible.
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
User avatar
avenger
Posts: 914
Joined: Mon Dec 02, 2013 12:11 pm

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by avenger »

willthrill81 wrote: Sat May 15, 2021 3:15 pm
avenger wrote: Sat May 15, 2021 3:02 pm Maybe an unpopular opinion: I feel like click bait such as this should be locked in this forum.
What do you think makes it 'click bait'?

Siegel certainly isn't the average Joe Blow hack writing financial 'reporter'. He's one of the most brilliant minds in the finance space, though neither he nor anyone else is infallible.
noun: click bait
(on the internet) content whose main purpose is to attract attention and encourage visitors to click on a link to a particular web page.
cheers ... -Mark | "Our life is frittered away with detail. Simplify. Simplify." -Henry David Thoreau | [VTI, VXUS, VWITX, SV fund]
JBTX
Posts: 8227
Joined: Wed Jul 26, 2017 12:46 pm

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by JBTX »

willthrill81 wrote: Sat May 15, 2021 2:46 pm
JBTX wrote: Sat May 15, 2021 2:45 pm Did he specifically predict 20% cpi inflation, or was he referring to inflation in real assets?
Rarely do people apply the term 'inflation' to real assets (e.g., stocks, real estate).
Yeah, I understand that. Listening to it again he said over the next 2 or 3 years we could have 20% inflation. I wonder if he means cumulative inflation over 2 or 3 years.

If we had 20% annualized CPI inflation the you know what would hit the fan.
Ocean77
Posts: 408
Joined: Wed Oct 23, 2019 3:20 pm

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by Ocean77 »

Well nobody forces you to click on that youtube link in the OP. It's not like the OP promised one thing, and the video then was something else, like a sales pitch.

Personally, I think we will get higher inflation. The economic disruption caused by the pandemic is causing shortages that will persist for quite some time. Shortage = higher prices. Just look here for one example: viewtopic.php?f=2&t=348868
User avatar
willthrill81
Posts: 25278
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by willthrill81 »

avenger wrote: Sat May 15, 2021 3:19 pm
willthrill81 wrote: Sat May 15, 2021 3:15 pm
avenger wrote: Sat May 15, 2021 3:02 pm Maybe an unpopular opinion: I feel like click bait such as this should be locked in this forum.
What do you think makes it 'click bait'?

Siegel certainly isn't the average Joe Blow hack writing financial 'reporter'. He's one of the most brilliant minds in the finance space, though neither he nor anyone else is infallible.
noun: click bait
(on the internet) content whose main purpose is to attract attention and encourage visitors to click on a link to a particular web page.
By that definition, a TV interview isn't click bait. And I don't think that Siegel mentioned a web site either.

I've repeatedly been saying myself for a while now that I wouldn't be surprised at all by 4-5% annual inflation for a few years, and that's not far from what Siegel is apparently suggesting (e.g., 20% cumulative inflation over the next three years).
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
JBTX
Posts: 8227
Joined: Wed Jul 26, 2017 12:46 pm

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by JBTX »

Robot Monster wrote: Sat May 15, 2021 3:13 pm "Siegel believes inflation will surge a bracing 20% over the next three or four years. That means it could be as high as 6.7% annually during that span..
Yes this is what I think he meant.
mbasherp wrote: Sat May 15, 2021 3:00 pm
Candor wrote: Sat May 15, 2021 2:38 pm He's not saying 20% per year. He's saying 20% over 3 years so 6+% per year.
Thank you. Everyone seems to be missing this.

It’s not much different at all from what he’s been saying since the CARES act was passed. They’ll inflate it away… a couple years of 4-5% changes the whole deficit picture.

I happen to agree. But no one knows for sure.

Yes
DB2
Posts: 1209
Joined: Thu Jan 17, 2019 10:07 pm

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by DB2 »

Headline catcher to be sure.
Californiastate
Posts: 177
Joined: Thu Feb 04, 2021 11:52 am

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by Californiastate »

Candor wrote: Sat May 15, 2021 2:38 pm He's not saying 20% per year. He's saying 20% over 3 years so 6+% per year.
THIS

Siegel is by far my favorite TV economist. He's the opposite of a doom and gloomer. I can't recall him every distributing a negative outlook without a positive spin.
User avatar
firebirdparts
Posts: 2606
Joined: Thu Jun 13, 2019 4:21 pm

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by firebirdparts »

Well if we get several years for prices to go up 20% then I bet he’s right. I can easily predict 20% inflation if I don’t have to say how long it takes.
A fool and your money are soon partners
User avatar
FIREchief
Posts: 6763
Joined: Fri Aug 19, 2016 6:40 pm

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by FIREchief »

abuss368 wrote: Sat May 15, 2021 11:34 am I can’t do anything about it! No body knows nuttin!

I will stay the course!

Tony
I can and did do something about it. I invested my entire fixed income portfolio in a ten year TIPS ladder over the last five plus years. Despite a negative real yield on my latest rung and a half, the overall portfolio will still pay a positive real rate of return (based upon my original purchase prices) regardless of 20% inflation over three years. 8-) I'm not saying I knew "sumtin," I'm just saying. 8-)

Aren't you the guy who had the "TIPS outta here" thread a year or two ago Tony? :D
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
User avatar
abuss368
Posts: 25019
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by abuss368 »

FIREchief wrote: Sat May 15, 2021 3:45 pm
abuss368 wrote: Sat May 15, 2021 11:34 am I can’t do anything about it! No body knows nuttin!

I will stay the course!

Tony
I can and did do something about it. I invested my entire fixed income portfolio in a ten year TIPS ladder over the last five plus years. Despite a negative real yield on my latest rung and a half, the overall portfolio will still pay a positive real rate of return (based upon my original purchase prices) regardless of 20% inflation over three years. 8-) I'm not saying I knew "sumtin," I'm just saying. 8-)

Aren't you the guy who had the "TIPS outta here" thread a year or two ago Tony? :D
No! Spreadsheets out of here! Bunny took them!
Tony
John C. Bogle: “Simplicity is the master key to financial success."
User avatar
watchnerd
Posts: 9113
Joined: Sat Mar 03, 2007 11:18 am
Location: Seattle, WA, USA

Re: Inflation could be 20% in the next three years: Wharton's Jeremy Siegel

Post by watchnerd »

invest2bfree wrote: Sat May 15, 2021 10:57 am This is an eye opening interview with Jerey Seigel on CNBC.

https://youtu.be/t3ygJbJjocI

If this comes true we will see fixed income being crushed. Do we sell all your bonds?


The bigger question
is how will this temporary money printing work against long term deflationary forces like technology, outsourcing and demographics?
The bigger question is to you believe Siegel, who is just saying stuff, or what the bond market is predicting, where big pocket institutions vote with their wallets.

5 Year Breakeven inflation is not even close to what Siegel is saying:

https://fred.stlouisfed.org/series/T5YIE
60% Global Market Stocks (VT,FM) | 38% Global Market Bonds | 2% crypto & securitized gold || LMP TIPS/STRIPS || RSU + ESPP
Post Reply