PIMCO's Gross and Wharton's Siegel in Donnybrook

Wharton professor Jeremy Siegel and Bond guru Bill Gross continued to exchange haymakers towards one another on Thursday. What might have seemed to be an innocuously passing statement in Gross's

may have escalated into an ugly diatribe. In the August Investment Letter, Gross questioned the Siegel Constant, which prophesizes a 6.6 percent average equity return based on data from the past century. Gross indicated that the previous century's return was “an historical freak, a mutation likely never to be seen again as far as mortals are concerned.” Siegel took exception to Gross's assessment. In a Tuesday appearance on CNBC, Siegel stated, “Gross is basically being misleading with his comparison, because total return of the stock market is not appropriate to compare to GDP.” Siegel went on to say Gross misunderstood the 100 year time frame for the 6.6 percent return. “I will grant that the last 10 to 12 years have been poor years,” Siegel added in the CNBC interview. “We started from the most overvalued market that we had in the last century and we've gone to not the most undervalued one, but a market is valued lower than the long-run average.” Wednesday, Gross appeared on CNBC's Street Signs and was asked to respond to Siegel's comments. Gross stated, ”I wanted to bring to the attention of investors is 6.6 percent number relative to 3 percent 3.5 percent real growth over the same period is an extreme level and for those expecting 6.6 percent real and 2 percent inflation and 8 percent to 10 percent return on their stock portfolio going forward, a low growth environment, they should expect less." It seemed the misunderstanding was cleared up and cooler heads might prevail. However, Thursday morning Siegel appeared on Bloomberg TV and pointed out that Gross had called for the Dow Jones Industrial Average to fall to 5000 back in 2002 over the next 10 years, but it stands near 13000. The professor landed what might be considered a low blow. Not to be outdone, Gross came on Bloomberg TV later that day to throw some punches to Siegel's ego. "Well Professor Siegel is getting a little nasty here but it seems like the gloves are off," Gross stated. “If he wants to argue against that and talk about DOW 5,000 and bear and bull markets, you know he's welcome to it. But he's obviously pushing at windmills in my opinion and he belongs back in his Ivory Tower," added Gross. Gross countered well and may have won the round, but this fight seems a long way from being finished.