Author Topic: Dow at 36,000  (Read 3647 times)

dafoe1999

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Dow at 36,000
« on: August 03, 2013, 09:13:36 PM »
I read an article on MSN about the Dow hitting 36,000 within 10 years. It got me excited. Then I read the comments. Which were all pretty much doom and gloom. What is everybody's opinion on this topic?

Kriegsspiel

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Re: Dow at 36,000
« Reply #1 on: August 03, 2013, 10:00:47 PM »
It's got a bad track record :p

Baylor3217

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Re: Dow at 36,000
« Reply #2 on: August 03, 2013, 10:03:36 PM »
Lol. There was a book written in about 2000 that had an u timely release date titled Dow 36,000.

At some point I suspect it will get there. We have an unprecedented monetary policy to contend with though so who knows.

Jamesqf

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Re: Dow at 36,000
« Reply #3 on: August 03, 2013, 10:05:48 PM »
I'd be surprised, seeing as it was in the 9000-10,000 range in 2003, and is now around 15,000.  I'd guess somewhere in the 25,000 range in ten years.

NCoffey

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Re: Dow at 36,000
« Reply #4 on: August 03, 2013, 10:38:40 PM »
How much of that increase is due to inflation though?

http://online.wsj.com/article/SB10001424127887324539404578342661413383002.html

That was back in March so it could very well be a real record high now, but it isn't really what people think. Maybe that is a good thing though. It is insurance against inflation that way I guess.

Khan

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Re: Dow at 36,000
« Reply #5 on: August 04, 2013, 03:11:19 AM »
First: the DOW as a metric is a ****ing terrible metric, it's price weighted and sucks as a measure of anything at all that actually matters. If you care about how the "market" is doing, then pay attention to "the market", like the S&P 500.
http://www.nytimes.com/2012/02/12/magazine/dow-jones-problems.html?pagewanted=all

Secondly: I don't care.

hybrid

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Re: Dow at 36,000
« Reply #6 on: August 04, 2013, 03:50:38 AM »
America is fabulous at wealth creation.  But that's a lot of wealth....  I'm old enough to remember the stock boom of the late 90s and back then there was talk about the days of stock busts being at an end (recall we weren't in a 12 year war, the budget was balanced, gas was a buck a gallon where I lived).  And then the tech bubble popped, 9/11, 12 years of war, rampant debt, $4 gas, and the housing bubble popped.  That's a lot of headwind.

I'm not a doom-and-gloomer, I just recognize that booms and busts are part of the cycle and articles like the one you read are part of the cycle during a boom.

Stick to the historical growth of the market over decades and the odds are your answer is closer to that number.  For an individual, a fortune can be made and saved - concentrate on what you are doing.  For society as a whole, I am not as optimistic.

AccidentalMiser

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Re: Dow at 36,000
« Reply #7 on: August 04, 2013, 05:11:32 AM »
I would recommend reading "Is US Economic Growth Over?" by Professor Robert Gordon from Northwestern.  He makes a strong case for a return to meager growth rates in the US for a variety of reasons.

With the Boomers aging, scaling back and retiring, I think things will slow down.  If the dollar is devalued, the Dow might make those levels but that won't necessarily mean there is twice as much real wealth in this country.

fiveoclockshadow

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Re: Dow at 36,000
« Reply #8 on: August 04, 2013, 07:10:21 AM »
I read an article on MSN about the Dow hitting 36,000 within 10 years. It got me excited. Then I read the comments. Which were all pretty much doom and gloom. What is everybody's opinion on this topic?

First rule of investing - do not read MSN, WSJ, Yahoo! Finance or any other financial media.  Ignore everything they say.  The financial media's only goal is to get you to trade - to do *something* - when the correct action for successful investment is to be passive and do essentially nothing.  Ignore the talking heads and pundits, they'll make you go broke.

As already pointed out the Dow is perhaps the dumbest index conceived - ignore it.  If you need an index to worry about that is reported everywhere the SP500 is a better one.

As to when will it get to 36000, assuming annualized growth of 7% about 12 years, 5% about 17 years, 9% about 9 years.  Somewhere in there, plus or minus say another ten to twenty years - it is a very noisy signal.  That is the best estimate possible and anyone who tries to tell you something more accurate than that is a charlatan plain and simple.