The Dow Jones Industrial Average could hit the 30,000 milestone by the end of January, but investors may want to put off celebrating due to the absence of any meaningful earnings growth, Wharton Finance Professor Jeremy Siegel said Thursday on CNBC's "Trading Nation."
The Dow's journey from 20,000 to 30,000 is a result of multiple expansion that is "perfectly understandable," especially in a low interest rate environment, the famed professor said.
Yet earnings growth needs to follow in a "meaningful way," and this hasn't been the case, he said.
Momentum investors who are merely following the strong trend higher and overlooking valuations have reason to be worried, Siegel said. After the market moved "too fast," any negative catalyst could "trip things up," he said.
"The market is going to be vulnerable for whatever disappointments, whatever bump that happens," he said. "Is Iran completely over? Is it solved? Do we have nothing to worry about in Europe or anywhere else internationally?"
Near-term investors looking to cash in on some profits may want to consider doing so and should "watch this market closely," as a 10% correction is becoming more likely, Siegel said. Longer-term investors have "no reason to panic" and start selling, he said.
The 2020 U.S. presidential election poses another risk to markets, especially if a Democrat takes over the presidency and Senate, the professor said. In his view, this would be "very bearish" because the party wants to undo President Donald Trump's corporate tax cuts.
The Dow was trading at 29,325.68 at the time of publication Friday.