In an investment climate peppered with the spices of rising inflation, unpredictable interest rates, and simmering geopolitical uncertainties, one might expect investors to be donning their financial raincoats. However, Wharton professor Jeremy Siegel advises keeping the umbrellas at bay and embracing the climate, championing an unyielding confidence in stocks.

During a recent dialogue on CNBC, Siegel doubled down on an audacious stance: in the face-off between stocks and bonds, he’s backing team Stocks all the way. His rationale? A robust economic growth narrative propelled by a surge in productivity, an exciting subplot where artificial intelligence (AI) takes a leading role.

Here’s a snapshot to put things into perspective: 2023’s GDP growth in the US is sprinting at double the pace of 2022’s, yet, interestingly, job gains haven’t followed suit, halving instead. This intriguing plot twist underscores a tale of productivity growth, where companies are honing their efficiency skills, much to the delight of the economy.

Siegel is banking on the AI promise, deeming it a potent fuel for growth. “Productivity-driven growth is the elixir that lowers inflation and boosts earnings,” he notes, acknowledging, however, that this same potion can nudge yields upwards. “With heightened real growth, borrowing, and capital investment on the menu, my order stocks, hold the bonds,” Siegel quips.

And what about the inflation narrative, especially if it’s more a byproduct of America’s deficits rather than economic growth’s muscle? Siegel’s investment recipe remains unchanged: a hearty serving of stocks, seasoned with a historical perspective that they’ve been reliable inflation buffers in the long run.

Now, cast the spotlight on the global stage, where geopolitical dramas unfold — Israel-Hamas, Russia-Ukraine, China-Taiwan. Siegel isn’t flinching, nor is he rethinking his investment script. Instead, he’s eyeing these tensions as cues to buy, not retreat. “History teaches us that stocks ascend the wall of worry,” Siegel points out, suggesting that clear skies in the investment world might signal a price peak. “Geopolitical tremors? They’re buying calls in disguise,” he asserts.

Pinpointing the S&P 500’s recent 8% backtrack since July, Siegel attributes it largely to climbing interest rates, with the 10-year US Treasury yield flirting with 5%. But here’s the twist — Siegel interprets these rates as messengers of unexpectedly strong economic growth, a positive prelude to future corporate earnings’ performance.

Siegel’s conclusion offers a panoramic view: “Yes, we’re seeing real yields perk up after a decade-plus slumber, but historically speaking, they’re not breaking any records. If this uptick is rooted in genuine growth, then it’s not spelling doom for stocks.”

In essence, Siegel’s philosophy is not just to weather the storm but to dance in the rain, leveraging these economic and geopolitical ripples as stepping stones to potential investment growth. For the discerning investor, it’s food for thought: perhaps the current climate is less about seeking shelter and more about learning to ride the wave.