In November 2010, here on Forbes I predicted the Dow would top 14000 in 2012.
I was wrong, by about a month.
As I write this the Dow is 13954 so forgive my premature speculation.
However please forgive me a few days and a few points grace,
This was me in early 2009 crying “go long” on Forbes at the bottom of the market,
If you want to go searching you will read me calling doom before the credit crunch too.
While it is very satisfying to remind people when you are right, especially from that far out, I’m bringing it up because the current forward market is at a very interesting crossroads, one that calls for a big “neck on the block” call.
Everywhere you look we are at interesting highs.
On the Dow we are a stone throw away from a record high. As the young folks would say WTF?? Are we still suffering the “great recession?”
More importantly what next?
This is what I want to call.
So as I can, for at least a while, claim powers of uncanny prophesy I think I owe it to the law of averages to predict it here in black and white, so I can get levelled.
Firstly this is what the bears see.
My position is that we won’t get another crash. A new Gold standard? A US default? All those crazy panicking old guys buying bullets and silver are going to disappointed. Sure they are bitter, they’ve been standing on the side-lines since 2008 wringing their hands, wailing and crying “chicken little.” Meanwhile fiat money bulls have been making more valueless paper money and living high on it. Whatever the next financial crisis will be, and there will be one, they won’t make a cent from it.
The market could of course top out here and make another plateau.
I don’t see that either, because there is about to be a big recovery and its going to run for a long time. Why, because all that QE cant just be pulled back, whats more all those soverign debts and all the rebalalncing will have to come via growth and inflation.
So I see this:
I see the market heading up this trend line hitting those balloons along the way. This is of course a crazy bet, but I think it is by far the most likely and ‘my skin is in that game.’
Why?
This:
On a log scale the market looks very interesting. The first half shows you what a big bull market can do to prices and the later half shows just how stable the market has been for half a generation.
The thing to bear in mind is the leg up like the initial 80s to 2000 bull run is not impossible. In fact all it would take to repeat is high inflation.
So my prediction is not a number but a direction and the direction is up. We will get over the next year or three, many meaningful all-time highs.
But of course you want a number. OK here it is. The Dow will hit 15000 this year and 16000 by the end of 2014.
If inflation gets out of the box however the market will go off the dial very fast and by the time crazy old guys are trying to buy gas with their silver dollars the Dow could have lots of zeros on it.