Last week Barry Ritholz spoke with University of Pennsylvania Wharton School Professor Jeremy Siegel for his Masters in Business interview series:
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The “Wizard of Wharton” as he has been called has been teaching at Wharton for 44 years. He is the author of the classic investment book Stocks for the Long Run
, now in its 5th edition. The Washington Post called SFTLR “One of the ten best investing books of all time.”
Siegel is also a Senior Investment Advisor to WisdomTree Investments, one of the earliest creators of Fundamental Index ETFs. Rather than assembling an index by its market capitalization, fundamental indexing uses other metrics such as earnings, dividend yield or book value. The concept is still a passively managed fund, but one that does not get wildly over-weight certain names. The idea was pioneered by Rob Arnott of Research Affiliates (RAFI).
Siegel’s motivation for using these funds came from his experience during the dotcom days. During the late 1990s, the Nasdaq was wildly expensive, trading (in Siegel’s words) at “600 times earnings.” The tech stocks in the S&P500 were disproportionately represented. Indeed, all the megacap holdings dominated the index during 1999 and 2000. When the bottom dropped out, these stocks which had risen too high, fell especially hard. Wisdom Tree ETFs were designed to avoid that sort cap weighted problem.
According to Ritholz: “It was an unusual podcast recording, to say the least… I had modest expectations as to this podcast, and he blew them away…
It is hard to describe just how enthusiastic and animated he is. Most of these interviews are two people at a desk (radio console actually) and having a conversation. Not this one. He was all over the place, spinning around in his chair, jumping up and down. If you listen carefully, especially during the podcast portion, you can hear his voice fade in and out. (That’s his chair doing a 360). Listen for the THWACK when he animatedly gestured, and whacked the microphone – its on this long arm attached to a pivot in the center of the console, which as the prof gestured he sent it careening on a huge arc around the console – I grabbed it and gracefully flung back to in front of him.
See if you can tell when he jumped up out of his seat.”
So there it is: Jeremy Siegel, The Wizard of Wharton. Please share and enjoy!