Jeremy Siegel outside the Estancia La Jolla. Photo by Chris Jennewein
Jeremy Siegel outside the Estancia La Jolla. Photo by Chris Jennewein

The author of one of the top investment books of all time predicted Wednesday that Donald Trump would be the Republican nominee but wasn’t likely to be elected President.

“If it is Trump versus Clinton, I don’t see how Trump can win,” said Dr. Jeremy Siegel, noting that prediction markets were lining up 8-1 in forecasting an eventual Hillary Clinton victory.

Siegel, author of “Stocks for the Long Run,” is a professor of finance at the University of Pennsylvania‘s prestigious Wharton School. He spoke to customers of the UBS San Diego County Complex at Estancia La Jolla in a question-and-answer format.

The economist speculated that a Clinton victory combined with continued Republican control of Congress would be good for investors.

“If we look at history, the greatest bull market in the 250-year history of the stock market occurred when a Clinton was President and the Republicans controlled the Congress,” he said, referring to Bill Clinton’s two terms in the 1990s.

Whoever becomes President, Siegel said, will have to work through Congress, so the extreme policies proposed during the campaign — such as Trump’s giant border wall and tariff war with China — simply won’t be possible.

“One has to remember that everything must go through Congress,” he said. “Very little can really be done on executive order.”

Turning to interest rates, Siegel said it was unlikely that the Federal Reserve Board will raise rates beyond 1 percent in the near term. Currently the Fed is targeting the federal funds rate in a range of 0.25 percent to 0.5 percent.

“We’re going to have low interest rates for many, many years to come,” he said, citing anemic economic growth, more risk aversion and a slowly growing workforce.

Siegel said stocks are a better investment now than in a long time, despite widespread worries about another market crash.

“Right now, on current valuations, we’re looking at a 5 percentage point advantage in forward-looking returns on stocks versus bonds,” he said.

That means investors can’t rely on fixed-income instruments like bonds and certificates of deposit, he said, but will have to come back to the stock market despite its volatility.

Siegel reminded the audience that Trump happens to be a graduate of Wharton’s undergraduate school.

“I can’t tell you how many times I get the question, ‘Dr. Siegel, were you Donald Trump’s professor?’ That would be kind of hard since he and I are the same age,” he said.

Chris Jennewein

Chris Jennewein is Editor & Publisher of Times of San Diego.