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Jeremy Siegel, a professor of finance at the University of Pennsylvania’s Wharton School


Siegel teaches finance at the University of Pennsylvania's Wharton School and is an investment strategy adviser with WisdomTree Investments. He's also the author of Stocks for the Long Run.

What's your outlook on the U.S. market, and where do you see opportunities?

I am still very bullish. I think the Dow Jones will pass 17,000 points in 2014, a gain of 10% to 15%. In a low interest rate environment, stocks often trade at 18 to 20 times earnings. But they are now trading at about 15 to 16 times, and I think earnings are going to continue to rise in 2014. Internationally, I think emerging markets are the most undervalued and represent good opportunities.

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What would you do with a $100,000 windfall?

I don't see another asset class that is going to beat stocks over three to five years. I would buy a broadly diversified global index fund with a higher weight toward emerging markets. While I think the U.S. market will do better than Europe in 2014, I think all stock markets will rise.

What keeps you up at night?

I sleep pretty well. However, there is always a possibility of a terrorist attack. Such an event, involving nuclear materials or something of that nature, is very unlikely, but would have a devastating impact on the market. I don't think that a financial crisis like the one we had in 2008 is going to happen for many, many years.

What's the best investing advice you ever got?

The late Paul Samuelson, who was my PhD thesis adviser at MIT, talked about low-cost indexed investments. That stuck with me, and I was one of the very first people in the Vanguard  S&P 500 Index Fund. Low-cost investing is still the way to go, but I now prefer fundamental indexing, which weights stocks by earnings or dividends instead of by market capitalization. The bulk of my equity holdings are in funds that are fundamentally indexed, covering different regions of the world.

What advice would you give to investors now?

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I would advise investors to move toward fundamentally weighted index investments, and have a generous allocation to stocks. I think equities are going to do very well over the next three to five years. I know a lot of people are afraid of stocks because of memories of the 2008 market crash. But people who think they have missed the whole bull market, haven't. There are more gains to be had.

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