This page has been archived and commenting is disabled.
Dow 20,000 Only a Matter of Time
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.
© EconMatters All Rights Reserved | Facebook | Twitter | Post Alert | Kindle
»
- EconMatters's blog
- 12730 reads
- Printer-friendly version
- Send to friend
- advertisements -
Exactly Vooter. Wage growth is toast. I know 3 people that got laid off this past week. How in the hell the market is going up in the face of this is a testament to what a truly fraudulent casino it has become.
Fonz,
See my post below. I could definately see it happening. Doesn't mean good things though. Organic growth is dead from virtually every measurable perspective. Everything else is just fits as the global financial ponzi scheme unwinds.
Hey centerline,
I would not be net short this market. I do think we can see dow 20k. Like you said above. Who knows what the other side of this scenario is. Gold may do me no good in my lifetime as well. But I have to make a call. At the end of the day like Lawsofphysics always says "that which cannot be sustained, won't be". So there is a breaking point to the market and to each family. The key is trying to hold out as long as you can and hope that you still have something squared away for the other side.
+1
How does it feel to miss a 120.4% up move in the S&P index?
http://tinyurl.com/axqxt5l
Apparently after having indulged in his daily CNBC ritualized genuflections to Bernanke, jse111 said:
Probably not quite as good as having participated in a 150+% move in gold, a 300+% move in palladium, or a 400+% move in silver during almost exactly the same timeframe.
PS: How does it feel to have a 14,000 ton financial sword of Damocles hanging over your head?
Meaningless unless you happened to have got into the S&P for the first time in your life at the exact March 2009 bottom, and have held that position without selling anything until today. I'll bet I could count the number of investors who pulled that off on one hand.
It appears safe to assume that you missed the entire move and are currently compensating irrationally!
It doesn't feel like anything, to tell you the truth. But that's because unlike you, I haven't devoted my entire life to feverishly collecting as many shekels as I can...
I am staying somewhat diversified. But, like you said, I could really care less because I am not married to the idea of money or a trade. This about survival in a broader sense. I would not be surpised if "surviving" means at some point recognizing that my $ is dead. Or that PM's are not going to do me any good in my lifetime. Or that I must abandon my house. Etc.
Most people (including so many gold bugs) are simply going to get crushed because they are still thinking in terms of the current system. As if there is an exit they are going to get through and emerge on the other side living like a rock star. Married to a notion = die with the notion.
Wages (non-government at least) were I am have been mostly going backwards. And I am not even talking in nominal terms.
Organic growth died a long time ago. I wager we have been on life support longer than most people realize.
Head-out-the-window sort of forecasting leads me to believe we are getting really close to something big happening. There are too many people starting to talk now... wanting to look behind the curtain. The finger pointing is starting to pick up too.
I recall some article from several years ago that laid out the basic course we are on. So far it has been right on the money...
financial crisis (theft) = sovereign crisis = political crisis = public crisis (currency crisis).
I have probably modified this a bit since my memory of the original theory is poor. Anyhow, it seems to me we are somewhere between the political and public stages.
What comes after the public crisis? Man. I wish I knew. I figure it is something like currency crisis = outright currency war (not bitch slapping and CB hot potato crap like now. I am talking outright fist fight) = real war. Or currency crisis = internal collapse/abrupt end to globalization.
I'm with Econ Matters. After watching non-biased programs like Jon Stewart and Bill Maher interviewing the most honorable leaders of our government - It has become evident that the US Housing recovery continues to gain momentum, through Obama's pro-jobs plan and we should easily see DOW 20,000. US demand for gasoline and basic materials continues to go through the roof as companies ceize this current dip in the market as a great buying opportunity for the next leg up ,and let's not forget folks!
Obama has healed the republican's deregulated crony nightmare in an era of liberal freedom followed by what has been 4 straight years of unprecedented growth. Yes We Can Mister President! Yes We Can!
I continue to buy BAC and AAPL shares each waking day knowing in the end these companies are in perfect position to capture this growing trend in demand.
Lamb Chops anyone?
"US demand for gasoline and basic materials continues to go through the roof "
-------------------------
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=a103600001&f=m
FAIL!!!!
wow, thats a chart and a half.
Demand destruction or more efficient vehicles? a bit of both perhaps?
even so, stunning decline.
I think the Dork of Kork posted a similar chart of european use a while back IIRC - Italy is now using less gass than in the 1950`s.
FYI- we had cars that got 40-50+ MPG in the fucking 70's. Gee now we hybrids that do the same. Oh how we advanced < rolls eyes >
shit, my son has a 15 year old GTI that gets over 40 MPG. You can't fix stupid, don't even try.
Smart cars that get 85 mpg in Europe get 35 mpg here. WTF?
how are we going to grow our currency in the global beggar thy neighbor currency wars? there won't a be a single person working in america, and everything will be MORE expensive. we are in a deflationary trend, and with population growth slowing there are simply too few people chasing way too many goods. DOW 10000, and then some
What utter nonsense. That which cannot be sustained, won't be. You cannot have a DOW 20,000/loaf of bread $50 if the average wage continues to decline as it has been since 2001. Not without a global fucking riot. Go ahead, show the wage data over the same time period you stupid cunt (man or women, the verbage is appropriate in this case).
full disclosure; I remain long all physical assets of real fucking value and a dependable tribe to protect it all with. I am short paper fucking promises and all the paper-pushers who are nothing more than useless eaters soon to be fertilizer for future crops.
while i am not driving, i am watching replays of the super bowl until next season starts.
why? sometimes i go to work. in between, i live in boogie down wonderland. i love ray lewis. and you know what? he has a job. a big job. pays enough money to get off from murder charges. moral of the lesson? makes lots of money. do what you want. the rest of boogie down wonder land lives on hope and spare me some change. potus is boogie down wonderland too.
The author of this article is an imbecile of magnitudes higher than the typical bulltard. He/she should get a room with the greatest snake oil salesman of all time, Jeremy Siegel, and they should tug-and-rub each other.
Maybe this retard could pull up a 24 year chart of the Nikkei, which is the foundational equity market for one of the most developed and "wealthiest" nations on earth, and chew on that 93% decline/loss of "investment" from 1989 to present (in real terms; 70% loss in nominal terms).
Equity markets rise.
Equity markets fall.
Equity markets get ramped.
Equity markets get dumped.
At the end of the day, equity markets are massively manipulated markets that dumb money flows into to get wiped out, in real terms AND EVEN OFTEN IN NOMINAL TERMS, AND WE'RE FACTUALLY LOOKING AT DECADES OF INVESTMENTS IN EQUITIES BEING WIPED OUT IN SEVERAL YEARS - that's not conjecture or a thesis, but fact.
Equity market "investing" is one of the greatest scams to ever have been perpetuated on the public in all of human history, and you need not look further than those who are about to retire or are retired who had 10, 20 and even 30 years of "equity returns" NOT ONLY WIPED OUT IN REAL TERMS IN THE PAST 5 YEARS, BUT IN NOMINAL TERMS, ALSO!
Bonds have outperformed equities over the past 1, 2, 5, 10, 30 and 40 years.
http://online.wsj.com/article/SB124725925791924871.html
That raises serious questions about the Siegel Constant. My suspicion is it reflects an invalid belief system; it is fair to say that, at the very least, it has not been thoroughly proven statistically.
What’s that again? SFTLR is one of the most widely read books in economic classes and business schools.
Exactly. Like the Efficient Market Hypothesis, or Homo economics, or the rational human, it is one of those squishy, poorly conceived, not well proven concepts that seems to be the underlying basis of some spectacular disasters. And, these issues have been thoroughly disproven by events of the past half century.
But the most damning criticism leveled at SFTLR is that it uses bad data to prove its point. Not only is the fundamental premise wrong, but its flawed in a way that dramatically overstates equity returns.
As Jason Zweig observed, “There is just one problem with tracing stock performance all the way back to 1802: It isn’t really valid.’ Siegel relied on data selectively cherry picked by professors Walter Buckingham Smith and Arthur Harrison Cole. Of over 1000 stocks in existence during 1802-1845, they ignored 97% of them. Hence, Siegel’s data series has an enormous survivorship bias built into it, especially in the 1802-1900 period.
By erroneously front-loading excess returns, the compounding effect over a century is enormous.
By artificially goosing equity return data for the 19th century, Siegel may very well has made equities over-owned in the 20th century.
Consider what this error means for traditional investors: The vast majority of classically educated MBAs and Economists have a very significant flaw in their investing assumptions. Imagine how many fund managers are running 100s of billions of dollars using this error as the basis for their money management.
The tenacity of bad ideas is quite astounding. Just because something is wrong, and verifiably so, does not seem to have much immediate impact. It remains a stable of academia, as well as the actual practice of investing investing — despite its questionable truth. We should not be surprised at this. Recall what Max Planck — who won a Nobel Prize for Physics in 1918 for originating quantum theory — famously said: “Truth never triumphs — its opponents just die out. Science advances one funeral at a time.”
Investing and Economics should be so lucky . . .
those fucking slants sat there with their needledicks in their hands for 23 years of blind superannuating ... the correct comparable is zimbabwe under the capable leadership of finance minister gideon gonzo who was so beloved so market friendly why they reappointed him
Did you honestly just post a crude SPOT chart as an example of something you should "buy and hold"?
Do you have any idea how a futures contract works?
Ever heard of carry?
Youre worse than that Phoenix Capital guy.
eigenvalue,
You do know that men & women write under the EconMatters brand?
So you were all wrong.
You'll get your face ripped off, blowtorched, and reattached on the back upside down.
Short. Balls deep. On Monday. Do it.
Excellent Analysis! OK, now let's have a look at EconMatters's track record
She was bullish on China in 2010-2011.
She predicted there would be no QE3 in the summer of 2012
She was bearish on crude oil at the end of 2012 to the beginning of 2013.
We all know what really happened.
Now she is calling for Dow 20000. Of course, a broken clock is right at least twice a day. Ergo, make your own decisions based on your own analysis.
exactly. perfect top call.
and of course the analysis is only in nominal values and therefore meaningless.
as Kyle Bass said the Zimbambwe stocks have nominally outperformed all others, and your entire portfolio now buys you 3 eggs.
EconMatters is clearly ZHs new "Leo" - put here for primarily amusement value and for easy target practice with the basic facts
I am shocked to read a bullish article on ZH. SHOCKED
I don't mind reading a bullish article, but that was your grandfather's analysis. Did she deliver this speech to the Chamber of Commerce?
Chartistry is idiotic. Her basic premise is this: "See this line? It points up. So like, it's gonna keep going up ...forever. And uh, you need to be invested".
Is this what passes for analysis?
How does one even attempt to analyze a chart which by Bernanke's own admission has been manipulated? On top of that, the means by which these indexes are being manipulated (QE and asset purchases) are inherently unsustainable.
Furthermore, her comment that it "is only a matter of time" is asinine. Time isn't just some extra variable which can be discarded. Time is a crucial part of the equation. How much time? 5 years? Or 50 years?
It's only a matter of time before the Sun engulfs the Earth in a supernova. By her logic we should all be short now in anticipation.
I'm all ears for an intelligent bull case -- and I have read a few. This is not one. This is idiocy.
You have see an intelligent bull case? In the absence of a global debt jubilee, I have seen none. Even then, it takes energy to do anything or create anything of real value and the world's EROEI has been declining exponentially. The 7+ billion people on the planet are still growing (albeit slower, but still more fucking mouths to feed).
Please link a few of those reasonable bull cases to your post, many of us in the real world looking for bullish data.
Not much energy and nothing on gold.
The article was not even that much fun to read either
"if the economy cooperates even modestly over the next three years"
You're not really paying attention are you?