Dow 30k 2018

[Free bird]

As fiscal stimulus gains traction & the fed normalizes rates we keep rolling.

 

[Dawg52]

That's only 20%. I'm disappointed.

 

[aaronc879]

It's certainly possible we hit 30K at some point in 2018 but I don't think we end the year at 30K+.

 

[Breedlove]

Maybe end the year at 35K ?

 

[Dawg52]

Now you're talking.

 

[NW-Bound]

No, the Dow will crash. Same with Nasdaq, S&P500, emerging market, developed markets, what have you.

People will sell them all to raise money to buy bitcoin and its cohorts.

 

[Breedlove]

Probably actually dreaming, I am scared somehow Bitcoin is going to wreck things

 

[Focus]

I've been to this party before...

Alan Greenspan, 1996: "Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past. But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?"

 

[DrRoy]

If it is just positive for the year I will be happy.

 

[ChiliPepr]

If it is just positive for the year I will be happy.

+1

 

[audreyh1]

I've been to this party before...

I know. But Alan Greenspan, clearly prescient, warned during 1996, and the party lasted past 1999, really accelerating during 1999!

All we can do is go a bit more conservative and expect to wait for a while.

 

[DEC-1982]

If it is just positive for the year I will be happy.

+1

My only desire is that we don't start the dreaded sequence of negative returns.

 

[frayne]

We are on a nine year bull run and sometimes the bull gets tired and slows down. I think sustaining the DOW in the 20-30 range is doable but way too many variables to predict. As mentioned above, anything positive will be good.

 

[NW-Bound]

For the context, here are the returns of those years. Greenspan's remark came after the blowout year of 1995. Indeed the party lasted until 1999, actually into the early months of 2000. Three years of pain followed this orgy, and it was debatable whether it might be better if it were not for 9/11.

1991 30.5%
1992 7.6%
1993 10.1%
1994 1.3%

1995 37.6% <----
1996 23.1%
1997 33.4%
1998 28.6%
1999 21.0%

2000 -9.1%
2001 -11.9%
2002 -22.1%

PS. The cumulative loss of 2000-2002 is 37.6%. However, the gain from 1995 through 1999 is 3.52x. And so, from 1995 through 2002, one still gets 2.19x.

It is only the late comers who started investing at the late 90s who got hurt because they got the pain without the enjoyment of the early gains.

 

[Another Reader]

If the market goes up to 30k, I will start lightening up on equities along the way. I'm already looking at selling one or two rentals, as I don't think current values are sustainable if mortgage interest rates go up much or if unemployment rises significantly.

The rest of you can "party like it's 1999." Whee!!

 

[Nightcap]

+1

 

[Nightcap]

I know. But Alan Greenspan, clearly prescient, warned during 1996, and the party lasted past 1999, really accelerating during 1999!

All we can do is go a bit more conservative and expect to wait for a while.

+1

 

[Focus]

It is only the late comers who started investing at the late 90s who got hurt because they got the pain without the enjoyment of the early gains.

My sense is we're at that point or close to it ... but I could be wrong.

 

[LRDave]

I've been to this party before...

I was at that party too. I can't remember if the weed was good or not back in '96....

 

[Free bird]

Money its a hit don't give me that do goody good bull $h*t weed? Did someone say weed?

 

[Breedlove]

Yes weed , invest in cannibus the boys in the country have raised prices to 200.00 an OZ . DW told me I've got to start drinking the cheap wine from the box . Weed is too expensive .

 

[BeachOrCity]

I wonder if we can look at this analytically?
Start with the 20% gain this year, of which 3% was for GDP growth, 2% for inflation, and 15 % for anticipation of tax cuts / speculation.
With the tax cuts in place, corp profits should be 21% higher (they keep 71 cents of every profit dollar instead of 65 cents).
That leaves another 6 percent gain for the tax cut effect (as part of this was priced in already).
Then add in 2 percent for inflation, and another 3% for GDP and you have an 11% return next year. Plus anything the corps get for increased profit due to less gov't regulation.

Thoughts?

 

[Another Reader]

Markets hate uncertainty and drop when the participants see it. All it takes is a suddenly likely Trump impeachment, serious saber rattling from the guy with the newly installed nuclear button on his desk, or some other geopolitical problem to make the market drop dramatically. No bets here.

Unless the global oversupply of investable money has created a new normal of low returns, we will see some type of reversion to the old normal at some point. Will it be this year? Who knows? Given the length of the party, the hangovers are probably going to be rough.

 

[Breedlove]

I really think this year will be Ok , we will probably see some sort of pullback 3 to say 6%. But it will return . It is true this market has been running for ten years. We get the infrastructure bill and we will be fine . Geopolitical .......unless it is really catastrophic I am not concerned . But remember over the long haul today international is lagging the U S economy. As money goes to International we might have another couple good years . Also remember the infrastructure bill.

 

[ERD50]

I wonder if we can look at this analytically?
Start with the 20% gain this year, of which 3% was for GDP growth, 2% for inflation, and 15 % for anticipation of tax cuts / speculation.
With the tax cuts in place, corp profits should be 21% higher (they keep 71 cents of every profit dollar instead of 65 cents).
That leaves another 6 percent gain for the tax cut effect (as part of this was priced in already).
Then add in 2 percent for inflation, and another 3% for GDP and you have an 11% return next year. Plus anything the corps get for increased profit due to less gov't regulation.

Thoughts?

I like your thinking, seems sound to me. Of course, anything can happen.

But I still like your thinking.

-ERD50