Dow 30k 2018

[audreyh1]

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 don’t think they will keep as much as you calculate because many companies were paying 0% tax rate. The effective corporate tax rate was far below 35%.

 

[Focus]

Warren Buffett's Favorite Stock Market Indicator Has Bad News | Money

Forget trying to run complicated calculations or read the stock market’s tea leaves. Warren Buffett says the “single best” way to tell if stocks are too expensive is to look at two simple numbers: the total value of all equities in the market and the total size of the economy.

Then compare them.

When the value of all stocks is 80% or less than the size of the economy, “buying stocks is likely to work very well for you,” Buffett wrote in an article for Fortune back in 2001. But when total equity value exceeds the size of the economy and then some, it’s a sign that investors are getting too giddy — and greedy.

Today, Buffett’s favorite market indicator is flashing its biggest warning sign yet.

Jack Bogle’s 5 bold investment predictions for 2018 and beyond

Bogle believes the U.S. stock market will enter a period of relatively low returns. He reached his estimate by looking at 2 percent dividend yield, a "deadweight loss from the 4.4 percent it has been historically," and earnings growth of about 4 percent, which matches typical economic growth, to predict future investment return of 6 percent. He also looked at the difference between today's price/earnings ratio of about 24, and the historic P/E ratio to estimate the speculative return.

But who knows what will happen? Not even Buffett or Bogle.

 

[Free bird]

Looks like energy will come roaring back in 2018. Growth roared in 2017.

 

[Car-Guy]

25k this week, maybe, or maybe not But I'm guessing tomorrow.

 

[Car-Guy]

8:35 cst, 25k - Bingo

 

[Hamlet]

I don’t think they will keep as much as you calculate because many companies were paying 0% tax rate. The effective corporate tax rate was far below 35%.

Yup, my very rough guess would be that the effective tax rate for the market as a whole will go from ~25% to ~15%. So a ~13.3% increase in after-tax earnings.

Of course, I also thought that the market was substantially overvalued at the start of last year, so I'm preparing for a down year regardless.

Another up year would be nice, but I think the market is getting into that Wily Coyote phase where it is floating in the air because it hasn't looked down yet.

 

[Spanky]

Another 20%+ return would be very, very nice for our retirement nest egg. I have no idea if this is remotely possible and would be satisfied with a single-digit return.

 

[Free bird]

30k by May. Merrill Lynch says FOMO effect started. The greed stage should be good for another 10k dow points.

 

[jazz4cash]

Thought it would be entertaining to review the Official 2018 Market Prediction thread but this is the closest I could find. It is interesting, though.

 

[Helena]

.

Hope springs eternal in the human breast


As for me... I prefer CDs. They're not sexy... but they are steady and dependable and enabled me to comfortably retire early.

.

 

[audreyh1]

Oh well, LOL!

DOW 20K 2018?

 

[Dtail]

@Free Bird is our site's eternal optimist. We need a few of them. lol

 

[ERD50]

@Free Bird is our site's eternal optimist. We need a few of them. lol

I'm waiting for the "best of Freebird's predictions" thread. Wold be more entertaining to see them all in one place!


-ERD50

 

[Dtail]

I'm waiting for the "best of Freebird's predictions" thread. Wold be more entertaining to see them all in one place!


-ERD50

Indeed. lol
I noticed his name has "gone traveling" attached to it. Does this mean he can't post anymore?

 

[REWahoo]

Indeed. lol
I noticed his name has "gone traveling" attached to it. Does this mean he can't post anymore?

Depends on whether he's taking a short trip or been permanently relocated. Time will tell.

 

[GravitySucks]

I can't find the prognostication thread either. I could swear I posted to one back in January....

 

[jazz4cash]

I'm waiting for the "best of Freebird's predictions" thread. Wold be more entertaining to see them all in one place!


-ERD50

Or just a list of his/her thread titles.....I can tell the author without looking.

 

[RenoJay]

So funny to read back on this. I think there was an assumption that the Fed wished to recreate the previous bubbles without learning from their mistakes.