An irreverent Wall Street Blog
Market to Hit New Highs, Shut Down Was An Historic Mistake Says Professor Jeremy Siegel
May 27, 2020
Jeremy Siegel is the Russell E. Palmer Professor of Finance at the Wharton School of the University of Pennsylvania. He has a PhD. I don't know jack about finance and I don't have a PhD. I did attend NYU's MBA program but left to get a law degree. Over the years, I have enjoyed Professor Siegel's many appearances on television and have often found him a sober, candid voice about the markets and the economy. On May 25, 2020, he appeared on CNBC:
Let me highlight a portion of Professor Siegel's remarks:
I think in retrospect, we will look at the lock-downs as the wrong policy. Social distancing, masks were right and the CDC was really slow off the mark on that. We could have kept many more enterprises open and relieved the sum . . . much of the seriousness, not all of it of course. History will show that we really unfortunately did not follow the right policy.
I'm not quite sure what the good professor thinks would have been the right policy months ago when the Angel of Death arrived, unannounced, at our doorsteps. Perhaps, in retrospect, he would opine that we should not have painted our doorways with goat's blood. Perhaps the professor would admonish us that, next time, we should paint with sheep's blood. Good to know for next time. Too bad about all those dead, first-born sons. Oh well, in retrospect, we pursued the wrong policy.
I'm not quite sure if the good professor understands that our elected officials lack the ability to make timely, intelligent decisions about anything. They posture. They debate. They grandstand. They wet a finger to test for the prevailing wind. Then, after they have combed (or combed over) their hair and after they have their make-up applied, they step before the nearest camera and announce an allegedly "dramatic" plan, which is little more than a meaningless gesture. And against that backdrop of inaction and delay, Professor Siegel thinks that the COVID lock-down, the belated lock-down, the lock-down that got rolled out slowly and haphazardly, the lock-down that some states embraced and others didn't, the lock-down that came in drips and drabs -- that lock-down was the "wrong" policy. Pray, do tell Professor, just what the hell do you think would have been the "right" policy back in January/February 2020 when something horrific was falling across our doors? And before you offer yet another opinion, please consider whether your "right" policy would have been supported by Congress, supported by the White House, affirmed by the Supreme Court on appeal, supported by the Left, supported by the Right, and resisted by those lovely armed folks who clamored that they wanted to Live Free or Die. Yeah, life in the real world is messy.
In contrast to the wrong lock-downs, Siegel seems to think that we might have just gone with the social distancing and the mask thing. Seriously? Have you seen President Trump wearing a mask? Have you seen the morons with automatic weapons protesting against forced social distancing? Have you seen the businesses all over the country that are refusing to remain closed or observe limits on their operations? Have you seen the folks spitting on those who insist upon masks? This past Memorial Day weekend, did you happen to notice all the folks in the pools and at the beaches sans masks, sans social distancing?
As Siegel apparently sees it, when the sick were first starting to show up at the doctors' offices and emergency rooms, we should have kept the restaurants open, kept the bars open, kept the movie theaters open, and kept the schools open. Unfortunately, the good professor's memory may be abandoning him because, in fact, as the virus first found its hosts, we did keep everything open. I recall virtually nothing being closed in the early stages of the pandemic. There may have been long lines to purchase supplies at the supermarkets, but we stood on those lines, out the door and around the corner, without masks or gloves, and without social distancing. We commuted. We leaned over the salad bars during lunch. We sat in conference rooms for meetings. Only after debate and denial did we conclude that things had gone from bad to worse to pandemic. At best, we pursued a too little, too late strategy.
We did, however, manage to keep some things open.
We kept open the morgues, funeral parlors, and the cemeteries -- although all of those places were soon overwhelmed. Professor, you do recall seeing the video of the dead bodies being kept on ice in trucks outside of the funeral homes, right? In fairness to Siegel, he laments about the possibly fatal impact of COVID on small business. In the absence of lock-downs, I'm not quite sure how those small business would have remained in business when their mom and pop owners took ill with the virus and required weeks of care or died. Maybe Wharton could fund a study by Siegel on that question?
Ultimately, Siegel's observation that history will "show" that we did not follow the right policy strikes me as silly. After all, history shows that we rarely, if ever, "follow the right policy." Human beings are notorious for refusing to see the truth before their eyes. Humans exalt in muddling through and persevering via trial-and-error (with great reliance on the latter). In his CNBC interview, Siegel anticpates a dramatic, robust stock market recovery:
"In fact, given no serious second wave, which could mean just effective therapeutics without even a universal vaccine, my feeling is it's even a likelihood that we will reach" fresh record highs, Siegel said on "Halftime Report."
How wonderful that the Professor has a "feeling" that there is a "likelihood" that the stock markets will set "fresh record highs." Notably, he's not predicting "stale" record highs but, thankfully, the "fresh" variety. Frankly, I prefer fresh highs to the stale ones any day!
On the other hand, what the hell is a "serious" versus "not-so-serious" versus "who-gives-a-crap" second wave of a killer viral pandemic? The example offered by Siegel is that we have effective therapeutics. We don't even need a universal vaccine, he says. We just need effective therapuetics to avoid the dreaded second wave of COVID. Unstated by Siegel is just what constitutes "effective therapeutics." You mean like a fabulous new form of Aspirin? The thing about therapeutics is that they're not a cure. So, according to Professor Siegel, if we get a second wave of COVID but have a super-duper Aspirin that allows most of us to get by without dying, that's almost like avoiding a "serious" second wave. Except, you know, not everyone is able to take any given drug. Some folks are allergic. Some are sensitive. For some, the miracle drug doesn't work. Then you're going to have a large number of Anti-Vaxxers who will spew nonsense that George Soros, Bill Gates, the Illuminati, and 5G are all behind this bogus "effective therapeutic," and they are going to refuse to take it. Oh my, professor, down here in the street below your ivory tower, things do get quite messy.
Siegel's observations smack of the musings of someone who has gone beyond his area of expertise. His purported nugget of wisdom amounts to little more than: If my aunt were a man, she'd be my uncle. If the COVID crisis ends, if there is no second wave, if there is a therapeutic but not a cure or vaccine, if sanity will replace stupidity overnight -- as if by magic, if pigs will fly, everything will work out just great and, wow, the markets will skyrocket. It is poetry without rhyme or reason. Siegel asks us to ponder what if a much of a which of a wind gives the truth to summer's lie. We consider blowing hope to terror, blowing life to isn't, blowing death to was. It is sad to see a Wharton professor waste his talent and intellect on such silliness.