(Bloomberg) -- Noted equity bull Jeremy Siegel says US stocks are still a “marvelous” bet for long-term investors even after the Federal Reserve’s aggressive policy stance has plunged the S&P 500 into a bear market.

“I’m staying put, I certainly wouldn’t be surprised if a year, year and half from now we’re 20-30% higher. I think stocks are undervalued greatly in the long-run,” he said. 

Siegel, who’s a professor of Finance at the University of Pennsylvania, told Bloomberg TV the fear of overtightening from the Fed and a US recession is keeping a lid on stocks, but interest rates may not remain elevated for much longer if they follow their long-term trends. That could boost stocks, in his view.

The Fed’s battle against inflation that’s running near 40-year highs has lifted interest rates to 3.25% from zero, forcing a repricing of risk assets that wiped $15 trillion in value from US stocks in 2022. The index had doubled in just 15 months from its 2020 pandemic low in one of the fastest bull-market runs on record.

Siegel also said the Federal Reserve needs to “give it time” for the aggressive rate hikes to bring down inflation, and warned that the risk of a recession now outpaces the threat from surging prices.

The Fed has boosted rates from near zero in March to 3.75% as of mid-September, a pace of increases without precedent for four decades. Traders expect the central bank to push rates higher by another three-quarters of a percentage point next month as it attempts to curb inflation. The chances of a recession have risen to 60%, according to the latest Bloomberg monthly survey of economists.

There’s been “disinflation” in housing, goods prices and oil, but major economic data releases work with a lag and haven’t indicated that decline yet, according to Siegel. Data Thursday showed the core consumer price index rose to a 40-year high, prompting market watchers to price in further rate hikes from the US central bank. 

“Through 2020 and 2021 I was a super hawk,” Siegel said. “Now I’m concerned about going too far in the other direction. We are very close, if not at the point where inflation will be tamed.” 

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