Google Dow 20000 within 12-18 mos.Do you believe this?
The market had been on a severe roller coaster ride the past several weeks. Everyone started to panic and once again all the newspapers started spewing their “the world is over” speeches. Well, the world’s not over and gold is not a religious panacea to solve your problems. The real gold is in the minds of the innovators and inventors who keep on creating, building, and driving forward the economy so that now we are set for the next boom in the market.
It’s not going to happen in a day. Even God took one day to rest. The market every now and then needs a day or two to rest. Maybe even more than a day or two. But over the next 12 to 18 months I expect to see Dow 20,000
Here are some reasons:
1) QE2 has not started. WHAT? You might say? I thought not only has it started last November, it’s about to end? Not true at all. Federal stimulus takes 6 to 18 months before even one dollar hits the U.S. economy in a meaningful way. So expect that $600 billion or more to start hitting toward the end of 2011.
2) Then why is the market going up? One major reason is because we are in the third administration of George W. Bush. The tax cuts got extended. This signaled that Barack Obama was going to pay lip service to his constituents while still keeping an eye on the stock market. The guy wants to get re-elected, after all.
3) Multiplier effect. Once the stimulus hits the economy, it’s not just $600 billion. It’s probably more like $3 trillion. How come? Because when you buy that coffee with $1 at the local deli, what does that deli guy do with it? He buys a newspaper? And then that guy buys a donut. The multiplier effect is up to 10X. To be honest, I’m more worried about a bubble in 2013 then I am worried about a economic slowdown.
4) Nonfinancial companies are at their highest cash levels ever. Almost $2 trillion dollars. They were hoarding the cash just in case bad times were going to happen again. Guess what? They di
everyone is expecting a huge crash based on what happened before. what they don't take into account is stocks represent hard assets and have to inflate as the global govts print more and more money. real estate, gold, farmland and stocks should all continue to appreciate, unless there is a way to remove trillions from circulation. we should have continued ups and downs but the upward trend will always win over time. the last decade has been a hiccup, but it looks like we will easily move past it. doesn't mean you are richer, however, since your buying power has been reduced.