In his recent interview with CNBC, Jeremy Siegel says that the current valuation gap between growth and value stocks is historically large. While he doesn’t expect a market collapse, he believes that the S&P 500 could still return 8-10% in 2024, but the value sector could outperform with returns of 15%. Here’s an excerpt from the interview:

Siegel: Well David I just looked at valuation which I think is, you know, ultimately the most important variable for returns.

I was looking at the Russell 1000 which divides into value and growth. The p/e ratio of the Russell 1000 Growth Stocks is 31.3.

The p/e ratio of the Russell 1000 Value Stocks is 15.9, that’s almost a 2 to 1 ratio.

Now, that’s not the record. the record was in 2000, but we know what happened after 2000.

So, you know, things could get wider, but ultimately they come more together. Now they shouldn’t be together, growth stocks should have a higher multiple.

But this is a much bigger gap than normal.

Now, I don’t think that this means any sort of collapse or anything for the growth stocks, and I think the S&P is on track for perhaps 8 to 10%, and that includes all the stocks, but I think we could have the value sector of the market do 15%.

You can watch the entire discussion here:

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