Posted on 05/11/2013 9:56:56 AM PDT by SeekAndFind
When the Dow Jones Industrial Average crossed 15,000, it had me dreaming of bigger things.
Specifically: Dow 116,200.
That was the market level predicted by mutual fund pioneer Bill Berger in a 1995 speech at a Society of American Business Editors and Writers conference in Boston, and it was almost as laughable then — with the Dow at 4,500 — as it seems now, when it stands more than 100,000 points into the Dow’s future.
Berger wasn’t expecting hyperinflation on the index; instead, the 70-something founder of the Berger Funds (which shuttered shortly after his death a few years later) said the market would reach his magic number in 2040. He wryly suggested that if he was proved wrong, people should visit him in the 2040s to discuss it.
Yet with the Dow at 15,000, it doesn’t really look like Berger will be off by much, as far-fetched as it seems.
I look back on Berger’s prediction periodically because he could not have foreseen the events that have happened since. In fact, that was a huge part of the point he was making at the time, about the difficulty of forecasting.
In 1995, the market was about to catch fire, and Berger didn’t live long enough to see the Internet bubble burst. He was not predicting the horrendous 2000s and, in fact, his point in looking out so far was that he didn’t feel that interim events — even catastrophic ones like the financial crisis of 2008 — would make much of a difference on what the market would do in the very long term.
It’s a lesson worth revisiting at a time when many investors are worried that the market cannot maintain its current highs, let alone proceed on any pace that would make 116,200 ever be a reality.
(Excerpt) Read more at marketwatch.com ...
Using the Rule of 115 — a rough measure of how long it takes for something to triple based on a constant return — that’s a gain of roughly 7% per year.
If that rate of return holds for the future — and it’s smack in the middle of the 6% to 8% long-term range that many market observers believe is realistic — then the Dow would triple twice more over the next 32 years.
And inflation will be 10% during that period.
Bubbles down get that big. You can only BS people with so much monopoly money. Inflation is right around the corner.
2050, we’ll be lucky to make it to 2020.
A Question:
A DOW of 116,500 — Would the US dollar actually be worth anything?
What does it matter what the DOW is or will be? The inflation rate will strip away any real gain in wealth.
At that point the ?$dollar$? will be worth about .001 cents. And America will be worth less.
The basis for Berger’s forecast was simple. By 1995, he’d been in the investment business for 45 years, and had seen the Dow go from below 200 to just over 4,300. Mathematically, Berger saw the Dow’s future as reflecting what had happened in the past, thus moving it from 1995 levels to 116,200 in 45 years.
Using easy, round numbers, the Dow needed roughly 16.5 years to triple from the time of Berger’s prediction, crossing 13,000 early in 2012.
Using the Rule of 115 — a rough measure of how long it takes for something to triple based on a constant return — that’s a gain of roughly 7% per year.
If that rate of return holds for the future — and it’s smack in the middle of the 6% to 8% long-term range that many market observers believe is realistic — then the Dow would triple twice more over the next 32 years.
And gold will be cheap at $50,000/oz.
That’s about the time i will hit 103
Just saying
Freegards
LEX
In his book, “The Next Great Bubble Boom” published in 2004, Harry Dent predicted that the Dow would reach 40K by 2010.
In his 2009 book, “The Great Depression Ahead” Dent predicted that the Dow “could” drop to 3800 by mid-2012.
$15,000 is only 908.16 in 1938 dollars according to one of the inflation calculators.
The DOW just might reach that high due to that pesky and persistent little factor called inflation.
Allow me to repeat that estimate.
2050, we’ll be lucky to make it to 2020.
thank you...
When was the last time we had inflation? The last 20 years inflation has been pretty low. I suspect that we haven’t had inflation in they way they explain it since the 70’s. I wouldn’t mind a bank account with 20 percent interest though....lol. These 0 percent interest accounts are for the birds.
And in 2050 a loaf of bread will cost sixty bucks.
Thanks SeekAndFind.
$116,500 price for a loaf of bread 2050
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