A finance professor at the University of Pennsylvania’s Wharton School has warned about inflation and the Fed raising rates far more frequently than the market anticipates. He also stated that bitcoin has evolved into the “new gold” for millennials.
In an interview with CNBC on Friday, Wharton finance professor Jeremy Siegel shared his outlook for various markets that he believes investors should be exposed to this year.
Siegel is the Russell E. Palmer Professor Emeritus of Finance at the University of Pennsylvania’s Wharton School. His research interests include demographics, finance, long-run asset returns, and macroeconomics.
He was asked about gold and commodities as future investments. Noting that gold “has been disappointing,” he emphasized that “it’s a fact that the young generation views bitcoin as a substitute” for gold. According to the professor:
“Let’s face it, I believe bitcoin has replaced gold as an inflation hedge in the minds of many younger investors… For millennials, digital coins are the new gold.”
“Old people remember the 1970s,” he went on to say. “During the inflationary period, gold soared.” “At the moment, it is not in favor,” he noted.
Professor Siegel also believes that investors should have exposure to commodities, which he believes can be achieved by investing in commodity-sensitive emerging markets.
The finance professor then discussed inflation, which he has expressed concern about on numerous occasions. “This is something I’ve been saying for a long time. “I’ve been warning about inflation for a year and a half,” he stated emphatically.
“The Fed and the fiscal authorities so overdid it, especially the Fed on liquidity,” he said. “They are so far behind the curve that there is a lot of inflation embedded in them.” Finally, the professor stated:
“The Fed will have to raise rates far more frequently than the market anticipates.”