Jeremy Siegel reveals his investment plan if the recession hits the stock market

  • Longtime stock market bull Jeremy Siegel is becoming more cautious about a possible recession.
  • The Wharton professor said a slew of recent economic data did not include the impact of the US banking crisis.
  • Despite the potential for a recession, Siegel believes October stock market lows will remain firm.

Longtime stock market bull Jeremy Siegel is increasingly concerned about the potential for an economic recession.

In the “Behind the Markets” podcast on Friday, the Wharton professor pointed out a series of recent economic data that showed worrying signs of weakening, including a decline in job vacancies, an increase in jobless claims and a slowdown in manufacturing.

And while the March jobs report was strong, it showed a worrying sign, according to Siegel: a drop in the number of weekly hours worked.

“What hasn’t been noticed enough is another drop of 1/10th in hours worked. A difference of 1/10th of an hour worked equates to almost 300,000 workers for the same number of hours , so if you have a 1/10th drop in hours worked per week, that’s like a 300,000 drop in payroll,” he said.

Falling hours worked last month offset the surge seen in January, which points to growing weakness in the labor force, Siegel warned.

But perhaps most worrying for Siegel is the fact that much of the recent weakness in economic data does not include the impact of the US banking crisis which has been triggered by the collapse of Silicon Valley Bank beginning of last month.

“We had an upward trend in [jobless] complaints. It’s not a collapsing economy, but definitely signs of weakness, and one thing is most important of all: all of this data is really pre-SVB, the banking crisis,” Siegel said.

“We won’t really get a lot of data until the next 4-6 weeks on the effect of the banking crisis. This worries me and keeps me on the defensive in the face of a recession,” he added. “I’m just saying my feeling is that the likelihood of a recession has increased.”

But if a recession does materialize, Siegel won’t be headed for the exits in terms of what he does with his stock portfolio, and he’s confident that any stock declines won’t surpass mid-October lows.

“I always think recessions are good buying opportunities. I don’t sell [stocks] in anticipation of [a recession]but I know a lot of other people do, which might lead to smoothness [in stocks but] no crash. I think the October lows are holding,” Siegel said.

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