Saturday, May 17, 2008

* Who is Jeremy J. Siegel and Why Should We Listen to Him?

Jeremy James Siegel, known as Wizard of Wharton, was born on November 14, 1945 in Chicago, IL. He has undergraduate degrees in Mathematics and Economics from Columbia University, and has a Ph.D from MIT. Currently Mr. Siegel is the Russell E. Palmer Professor of Finance at the Wharton School of Business at the University of Pennsylvania. Considered an expert on the economy and financial markets, he frequently appears on CNN, CNBC, NPR and is a regular columnist for Kiplinger's.

For many, he may be better known for what was said about him by a very influential person. In a Q&A session at the 2006 Berkshire Hathaway annual meeting, Charlie Munger, Berkshire's Vice Chairman was asked to comment on Siegel's theories. Munger replied, "I think Jeremy Siegel is demented." Warren Buffett, clearly a little embarrassed, added "Well he’s a very nice guy." Munger continued, "He may well be a very nice guy, but he’s comparing apples to elephants in trying to make accurate projections about the future."

More recently, Mr. Siegel has worked as a consultant and board member at WisdomTree, a money management firm specializing in exchange-traded funds (ETFs). In his book, The Future for Investors, Mr. Siegel points out that the 100 highest-yielding stocks of the S&P 500 outperformed the broader index by more than three percentage points annually from 1957 to 2003. Leveraging his research, The WisdomTree Dividend Top 100 Fund (DTN) consist of the 100 highest-yielding members of the 300 largest companies by market cap in WisdomTree's Dividend Index. Unlike conventional indexes that are weighted by market cap, the WisdomTree fund is weighted by yield. The theory here is that market cap weighting will cause the fund to buy high and sell low, while weighting by yield will do just the opposite since as the yield rises the share price drops.
With WisdomTree, Mr. Siegel will now have the opportunity to put in practice what he has been teaching, while the whole world watches. I've added DTN to my watch list.

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