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Dow 20,000 Only a Matter of Time

EconMatters's picture




 

By EconMatters

 

 

Dow Record in sight

 

We are 200 points from breaking a new high in the Dow Industrials which got me looking back at assets over the last 25 years in relation to the value of the US Dollar Index and the overall money supply. 

 

25 years in Markets

 

Some of the best performing assets are the stock market and gasoline with bonds and housing putting in steady gains. Of course with all assets you get a whole lot more bang for your buck if you happen to time the market correctly. And assets like Stocks, Housing and Gasoline all have crash periods where Dow components go bankrupt and are replaced, homeowners lose their homes, and in the financial crash any Gasoline investor would have been forced out of the market. 

 

Need to be Invested

 

But make no mistake the long-term trend is that you want to be invested in something that appreciates in value, you can get out of it if you need to as in liquid, and is going to be attractive to other investors over the long haul. But you have to be invested to take advantage of the trend of the growing money supply, currency in circulation, printing press phenomenon that ultimately underlies all asset values. 

 

Your Grandpa was on to something

 

Whether it is the price of a car, a new house, the price of gasoline, a movie ticket, or a good stock there is going to be more money created each year chasing these assets in the system.  This represents the phenomenon of “when I was a kid a coke cost a nickel” or you could buy a home or a vehicle in the 1950`s for prices that are unrecognizable today. 

 

Dow 20,000 only a matter of time

 

In looking back at history of markets, if we take the Dow Industrials, there is no doubt we are going to blow past Dow 15,000, 16,000, 17,000 and so on based upon currency creation effects alone. The fact that markets are liquid, capital will flow in and out, there will be major pullbacks, those who fail to market time will get crushed at times, but make no mistake Dow 20,000 is a foregone conclusion.

 

If we filter out the noise, and it is considerable at times, the unmistakable point is that most assets appreciate over time. The last 25 years show quite clearly in Gold, Lean Hogs, Real Estate, Stocks and Energy the benefit of being invested, especially in relation to the ever-present growing money supply in the economy.

 

I would say that if the economy cooperates even modestly over the next three years that the Dow 20,000 milestone will be reached. For how soon we get there will depend upon other variables for sure, but watch how the market performs once we break through the 14,200 level, and start putting in new highs in the other indexes. The pace can really take off once markets are in unchartered territory, and we can start taking 1000 point monthly clips that will leave you speechless. 

 

 

And of course Dow 20,000 isn`t going to happen without some pain along the way, but make no mistake it will happen, and it is closer than you think! We are on the verge of taking that next leg up in the Dow, in fact, we should set a new high pretty soon; enjoy the ride as this breakout has been a long time coming.  

 

 

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Sat, 02/23/2013 - 18:02 | 3270358 Sigep0612
Sigep0612's picture

China is buying cars.  Gas prices go up but Americans still think "The US economy isn't that strong...why are gas prices going up?"   Americans haven't come to the realization that the US has a huge debt problem and the future is bleak but it hasn't hit Americans YET.   What happens to the US when China demands a better return on their Treasuries?

The linear thinkers are prepared to salute the benefits of Obamacare.   Fly to a foregin country.  Get off the plane.   Look around the airport.  You can immediatley pick out who are from the US and who are not.  Americans are fat.  Foreigners are thin.  Do you think America can magically become helathy?

My point?  Today, America is creeping along.  Growth is anemic but corporate profits are still good because of lower labor costs.   At some point the bloom comes off the rose.  Profits are not sustainable as consumption declines. The US will need to face the music and change.  However, the longer we overeat the more painful and the longer it will take to recover.  At a time in our nations history when we need true leadership and honesty we have a President who like to bullshit.  Americans don't want to sacrifce so they lap up his BS.  

The purpose of this article is to solicit an emotional response.  It's nice to read this kind of drivel because it makes us feel good.  Geez whiz Toto is my 401K really going to increase? Reality.  Yes...we can continue to pretend for a little while longer but not too much longer.   The demise of America as we know it is inevitable but not immenient. 

Sat, 02/23/2013 - 17:53 | 3270349 Herkimer Jerkimer
Herkimer Jerkimer's picture

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Haven't we, didn't we hear something like this before, back in the 90's or was it early OO's?

 

Well, third time is a charm!

Must be different this time!

 

•J•
V-V

Sat, 02/23/2013 - 17:24 | 3270294 A Cruel Accountant
A Cruel Accountant's picture

every post on this site is negative on the stock market.

 

BULLISH!

Sat, 02/23/2013 - 17:38 | 3270322 Jack Sheet
Jack Sheet's picture

suck on this then
http://onswipe.com/investmentwatchblog/#!/entry/market-collapse-in-process-billionaires-continue-to-dump-us-stocks,511671cdd7fc7b56702262d0/2

Sat, 02/23/2013 - 17:15 | 3270278 BlueCheeseBandit
BlueCheeseBandit's picture

Wasn't it just a week or two ago ExonMatters was talking about deflation and how low (cherry picked) commodities are? Now it's assets always appreciate (with a data set of a few decades to back up his universal rule), Dow 20k, buy and hold stocks? So your game is long stocks and short commodities? Welcome to the '90s.

This guy is a fucking clown. I don't know why he's on ZH. But even if it's for comedic value, it seriously diminishes the site quality.

I understand wanting to have competing views and all, but they should be up to par. It may be that no competing views are (except on a short term basis). In that case ppl can go to WSJ or CNBS to be lied to.

Sat, 02/23/2013 - 17:42 | 3270291 akak
akak's picture

 

I understand wanting to have competing views and all, but they should be up to par. It may be that no competing views are (except on a short term basis). In that case ppl can go to WSJ or CNBS to be lied to.

Exactly!

I am sick to death of the morally and intellectually bankrupt jellyfish (read: spineless floaters) who are incapable of exercising any semblance of a sense of judgement, and who equate lies, deception and the perversion of facts with "competing opinion".  That would be like calling child abuse and serial murder just an 'alternative lifestyle'.

 

Edit: Junked by a child abuser, serial murderer and/or jellyfish.  Color me amused.

Sat, 02/23/2013 - 16:52 | 3270237 John Law Lives
John Law Lives's picture

This article is piffle.  ZH can do better than posting this.

Sat, 02/23/2013 - 16:38 | 3270212 vamoose1
vamoose1's picture

  foursquare  with  you       not  quite  so  clear on  what   i  can  buy  wit   it  

Sat, 02/23/2013 - 16:23 | 3270182 Bear
Bear's picture

This is either 'Bull' or I'm going to have to change my name

Sat, 02/23/2013 - 15:06 | 3270056 ebworthen
ebworthen's picture

How about a longer term view that includes the collapse of currencies, nations, and empires?

Sat, 02/23/2013 - 13:32 | 3269934 Never One Roach
Never One Roach's picture

The market goes up...until it doesn't.

 

That's my experience.

Sat, 02/23/2013 - 13:30 | 3269924 mrdenis
mrdenis's picture

So I'll be OK with the 25 single home rental units I still own in Detroit ? 

Sat, 02/23/2013 - 13:27 | 3269923 mrdenis
mrdenis's picture

I knew the article was a joke ...NO gold or silver .....

Sat, 02/23/2013 - 13:24 | 3269909 joego1
joego1's picture

The stock market in zimbabwe was the best performing in 2007, straight up just like the graph! I can invest in the U.S. stock market and allow the vultures to pick my pocket at every "dip" or I can go long silver and have world history as my investment advisor. I was fucked once in 2008 never again. When the sewage of debt is cleaned up and the crony capitalists flushed out I'm in but most likely it won't happen in my life time.

Sat, 02/23/2013 - 13:51 | 3269973 Herkimer Jerkimer
Herkimer Jerkimer's picture

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Can I trade my Zimbabwe market run up for those two eggs Kass mentioned a few weeks ago?

 

•J•
V-V

Sat, 02/23/2013 - 14:40 | 3270028 wonderatitall
wonderatitall's picture

no

Sat, 02/23/2013 - 13:15 | 3269895 topspinslicer
topspinslicer's picture

Dow 20,000? And they shall proclaim Benny At The Fed and Owe-bama kings of the world. Let us crown them with a thorny crown and wooden plus signs

Sat, 02/23/2013 - 13:14 | 3269891 Quinvarius
Quinvarius's picture

Inescapable

Sat, 02/23/2013 - 12:58 | 3269866 nobusiness
nobusiness's picture

Doe anyone look at Japan for evidence.  They are at least 10 years ahead  of the US when it comes to printing.  their stock market has been crushed.  i don't know about home prices.

 

http://www.ritholtz.com/blog/2011/08/turning-japanese-spx-vs-nikkei-index-10-year-lag-2/

 

Sat, 02/23/2013 - 15:47 | 3270120 disabledvet
disabledvet's picture

home prices in ABSOLUTE yen terms have declined on average 80% since "bubble" was burst by their Central Bank in 1993. since that yen has actually increased in value relative to the dollar that would be in DOLLAR terms even larger. https://www.google.com/search?q=japanese+house+price+history&hl=en&rlz=1...
i think an interesting question is "is gold an asset?" and no so much property as we all know the sunk costs that go into a home...and yet it is claimed "there is no carrying cost to gold" (unless you have a lot of it.) yet i am un...cleared...if this is true. in other words "if we base our entire economy on the price of gold" (through and explicit "the price of gold must always rise" standard) yet "we only have a few thousands tons of the gold" seems to me "there is a high carrying cost indeed." it would be very interesting to transport JP Morgan from his past and into our present and without any knowledge of the goings on in our world say to him "the price of a barrel of oil is currently this much. Describe this world we have brought you in...in a financial sense." I have no doubt "his first words would be do you have cigars in your time because i would very much like to have one. If they are any good of course."

Sat, 02/23/2013 - 12:48 | 3269859 otto skorzeny
otto skorzeny's picture

charts are cool and impress all of the chicks in company projection meetings but the base, tribalistic instincts of man trumps all.

Sat, 02/23/2013 - 12:47 | 3269858 doggis
doggis's picture

HORSESH*T!!  .......EXCUSE ME - IT IS  HORSESH*T of the LINEAR THINKING VARIETY

 

please oh great one, tell me what happens when a NON LINEAR EVENT occurs?

 

HUH! ......i hear crickets...... This is zero hedge - we look for the non linear each and every day!!!!

 

TD why are you allowing the posting of such drivel - i can get this stuff everywhere else in the MAIN STREAM MEDIA SPHERE!!!!!  please set the bar higher!

Sat, 02/23/2013 - 12:43 | 3269855 Market Analyst
Market Analyst's picture

lawsofPhysics:

 

It is great you can add a wages component to the debate, and wages do go up, i.e. higher minimum wages, etc. yeah they may not go up as much as other assets, (a lot of variables computers, increased productivity & efficiencies) but they do go up.

 

But pay attention to the point of the article, it wasn`t about wages, or nominal terms it was about Dow 20,000 and it is spot on. I am sorry if you are short, markets don`t match your ideology, your economic theories, etc.

Do you want to make money or be proven right eventually?

Go ahead and short the market because of lower wages, but even $7.75 or whatever the minimum wage is these days is higher than $3.25, most things go up, the article wasn`t discussing nominal terms, it was discussing the likelihood of Dow 20,000!

Sat, 02/23/2013 - 15:46 | 3270118 LawsofPhysics
LawsofPhysics's picture

Your "analysis" is about as useful as saying that the sun will go supernova at some time.  No shit sherlock.  By the way, I do just fine.  The issue of wages is one of many structural ones that is going to bite the world in the ass before the Dow every sees 20,000, unless of course you mean that in a zimbabwe market, and would not be a good thing.  I am not a day trader, I trade for the long term.  Please wake the fuck up, there is no "market" to short, there is the Fed, and that is it.  Many of of my physical assets continue to generate real wealth so fuck the Fed.

Sat, 02/23/2013 - 16:02 | 3270139 disabledvet
disabledvet's picture

obviously there are many assets that can still be "shorted" despite your protests of "the price is moving the wrong way...against ME!" the meme of "rigged casino" works because "the only stocks i can short are the penny variety." you can of course short Apple...expensive, dangerous. I do not trade but i understand the temptation...we're all told not to be market timers..."but inside every man" (and they are all men) "is a market timer waiting to jump out." hence "Dow 20000 is a stretch beyond all belief" using these metrics. Not ONE chart of ACTUAL ECONOMIC GROWTH? hahahahaha. "and he calls himself an economist"?????!!!! i find it interesting actually that the ones i respect in the field (and yes you must post vis a vis us plebes to get respect now) have started to declare "the growth myth"...and indeed, these are economists much more to my liking...not because i agree with them (oh the wants i have, oh the needs) but because their reality speaks to me...of the truth i see..we ALL see..but they see better "with their numerology." GDP is NOT a myth of course...but GROWTH in it can very much be...hence "typical snake oil here" as "from whence the growth come but not from product"? (at a price of course.)

Sat, 02/23/2013 - 16:32 | 3270204 LawsofPhysics
LawsofPhysics's picture

the issue of interest payments on debt is also ignored.  Debt servicing can become a liquidity trap unless you allow for a default, no matter how low rates are, econ 101.

Sat, 02/23/2013 - 17:09 | 3270269 Bicycle Repairman
Bicycle Repairman's picture

The analysis avoids many variables in a complex world.  Looking at a graph trending up and extending does not cut it.  This analysis is a joke.

Sat, 02/23/2013 - 17:47 | 3270340 Market Analyst
Market Analyst's picture

Looking at a graph trending up and extending does not cut it.  This analysis is a joke.

 

Unless you want to make money. Most of the people that are so bitter about the article I bet have missed the entire rally from 2009! Too funny: there are winners and everbody else:)

Sat, 02/23/2013 - 12:25 | 3269826 GrinandBearit
GrinandBearit's picture

15-16K?... maybe. 

With less jobs and stagnant/lower wages there is no way the DOW will hit 20,000. 

Even if it did hit 20K, I'd hate to see how much gas and food will cost then.

Sat, 02/23/2013 - 12:15 | 3269820 ptoemmes
ptoemmes's picture

Great, until it doesn't.  Actually knowing when to fold them is perhaps at least as valuable a talent if not more valuable.

Sat, 02/23/2013 - 12:11 | 3269812 moneybots
moneybots's picture

IBD has a chart showing distribution days recently.  If the DOW is going to 20,000 now, you are not going to see distribution days.  The insiders are not going to sell to the outsiders if the market is going up another 6,000 points

APPL was given a 1,000 price target and we know what happened next.  A few days ago GOOG was given a 1,000 price target.

The economy is deteriorating and the DOW can ignore that to ring the bell a few hundred points higher, but reality can be ignored only so long.

Yes, DOW 20,000 IS inevitable, given a long enough time horizon, as world population 8 billion IS also inevitable.

The author says one should own something that is going up in value.  Then he shouldn't want to own the stock market based in dollars, which is over time, going down in value.

As Bass mentioned, the best stock market of the last decade was Zimbabwe, where your entire portfolio would buy you 3 eggs.  So much for getting rich iin the stock market.

Sat, 02/23/2013 - 12:30 | 3269835 moneybots
moneybots's picture

Let's look at chart number one.  The DOW is going straight up.  That is what is called your parabolic blow off.  X straight weeks without a loss.  If you back up a few years and draw a line under the lows, you get a parabolic arc. 

Back up a few years from the 2007 high and one could also draw a parabolic arc into the high.

 

100% of parabolics FAIL.  100% means every time, as in 1+1 ALWAYS = 2.

 

 

Sat, 02/23/2013 - 16:07 | 3270153 disabledvet
disabledvet's picture

"gold=infinity." 1+0 ALWAYS=1 "but our job is to move beyond that lest we become boring and nonplussed." we are in the media space now and we must at least ACT like there is more than just gold we are concerned about. GIRLS for example...

Sat, 02/23/2013 - 12:09 | 3269806 centerline
centerline's picture

Martin Armstrong has some interesting thoughts that agree with a DOW 20,000 theory.  Just FYI.

All markets are tied together and should Japan and/or EU implode first, cash is going to run like hell from those nations and into US markets.

In this case, our high unemployment might actually serve as a "hyper-inflation" buffer.  But, accelerating inflation won't be avoided.  I suspect that if this happens it will be one hell of a ride.  It will also be the last chance to position oneself for the inevitable financial event horizon.  PMs might even get slammed - shaking out all sorts of weak hands, hedges, etc.

Funny thing is that most people will think that OMG, the recession is over.  Party to resume at full speed!  Champagne, fast cars, and house flipping for everyone!

I would also expect that the landscape of that moment will be filled with rapidly expanding financial bubbles everywhere.  More than we have ever seen before.  Cash desperately pilling into anything and everything regardless of risk.  A blow-off top like no one has ever seen.  And no one will "see it coming."

Sat, 02/23/2013 - 12:59 | 3269870 nightshiftsucks
nightshiftsucks's picture

So say Japan collapses what would the value of the yen be ? How many stocks would it buy ?

Sat, 02/23/2013 - 13:26 | 3269920 centerline
centerline's picture

capital flows dont quite work like that!

Sat, 02/23/2013 - 12:06 | 3269801 Dr Paul Krugman
Dr Paul Krugman's picture

I should call my advisor and buy more AAPL.

Sat, 02/23/2013 - 11:55 | 3269781 Jack Sheet
Jack Sheet's picture

This drivel has a firm place in the lower rankings of ZH along with Penix Crapitall Research.

Sat, 02/23/2013 - 11:50 | 3269764 DowTheorist
DowTheorist's picture

If the Dow Industrials makes a new all time high, even perma bears like Russell are ready to acknowledge that the bulls are firmly in command.

Furthermore, even in the absence of new all-time highs, the market is firmly bullish long term. A primary bull market was signaled on January 2, 2013 and the odds favor its continuation. Time will tell.

 

http://www.dowtheoryinvestment.com/2013/01/dow-theory-special-issue-asse...

 

 

Sat, 02/23/2013 - 14:01 | 3269960 Market Analyst
Market Analyst's picture

nice try, just keep changing the variables until it suits your view of the world!

here is the real chart!

http://research.stlouisfed.org/fred2/graph/?s[1][id]=WASCUR

 

Sat, 02/23/2013 - 15:49 | 3270123 LawsofPhysics
LawsofPhysics's picture

Nice try, but you need to divide by the number of people in the same economy.  Yeah, we are all doing much better.  Must be our lying eyes.  Here, let's make it simple, tell me asshole, what's the average wage over the same time period?  Are you going to try and tell us there is no inflation either?  Go ahead, stick that neck out motherfucker, there is a guillotine with your name on it.

Sat, 02/23/2013 - 14:59 | 3270047 centerline
centerline's picture

you know that you have use this in some form to make a comparison, right?  overlay, divide, etc.?  otherwise, what is the point?

Sat, 02/23/2013 - 11:44 | 3269757 rsnoble
rsnoble's picture

I don't think it will happen.  But then again I'm not the one running the FED.  What difference would $10loaf bread make if the Fed's still pumping trillions?   Everything goes up except wages.  A select few get rich, everyone else goes to tent city.  Just like now.  And this of course takes in account a perfect climate of no major war etc.

Crazy times.

Sat, 02/23/2013 - 11:40 | 3269752 Michelle
Michelle's picture

Dow 20k, someday yes.

Completely contradictory to your article 2 weeks ago showing NO INFLATION but instead DEFLATION. I'd much rather read your crap if it demonstrated a common theme whether I agreed or not rather than some eclectic collage of unthoughtful arguments based solely on which one of your writers got out of bed this week.

 

 

Sat, 02/23/2013 - 12:04 | 3269797 falak pema
falak pema's picture

so according to you : econmatters = econtatters.

Sat, 02/23/2013 - 11:39 | 3269749 Downtoolong
Downtoolong's picture

Dow 20,000. So what if it does? When are economists going to get it through their thick heads that nominal inflationary growth isn’t growth at all.

One of the greatest scams of the last generation was the purveyance of the idea that a home is an appreciating asset. This can only happen due to nominal inflation, unless the land beneath it is really increasing in demand. In truth, improved real estate on average loses real value over time. It physically depreciates and becomes dated and obsolete. Lots of people today are learning this the hard way with a mortgage that far outlived their real interest in their home.

Sat, 02/23/2013 - 11:37 | 3269746 Vooter
Vooter's picture

"This represents the phenomenon of “when I was a kid a coke cost a nickel” or you could buy a home or a vehicle in the 1950`s for prices that are unrecognizable today."

Inflation is NOT a natural "phenomenon" like gravity or light, you fucking moron. It's a POLICY. It's a backdoor tax INTENTIONALLY CREATED by coin-clipping empires/governments to allow them to spend as much "money" as they want, whenever they want, wherever they want, FOREVER. Or until they collapse--which they ALWAYS do.

The other problem with this idiotic piece of garbage is that it conveniently neglects to take into account the fact that wages in the U.S. are no longer inflating! What exactly do you think people will use to pay for the coming $8 bread, $10 gas, and $60,000 automobiles?

Call us when you graduate from eighth grade in June...

Sat, 02/23/2013 - 11:58 | 3269787 LawsofPhysics
Sat, 02/23/2013 - 17:03 | 3270258 Bicycle Repairman
Bicycle Repairman's picture

You didn't earn that.

Do NOT follow this link or you will be banned from the site!