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Will Dow return to 14,000 ? Bet on it
MSN Money ^ | 9/14/2009 | John Markman

Posted on 09/14/2009 4:53:17 AM PDT by SeekAndFind

For all the talk of another big drop coming, the pieces are in place for 3 years of 15% annual increases for the giants of the blue-chip index.

It's been exactly a year since the government kicked a smoldering financial crisis into a roaring blaze by letting Lehman Brothers (LEHMQ, news, msgs) collapse. Observers this week are memorializing the mistake, but investors need to look forward -- and what they should see is that the government's later reaction to its error may have actually laid the groundwork for the greatest bull market of the decade.

For while it seems unlikely and irrational in the context of all the lousy economic news you see right now, stocks are well on their way to recovering from the Lehman jolt and ambling with all deliberate speed toward all-time highs. And they don't really care if you believe it or not.

Dow 14,000? Maybe not next week. But in three years? Not a problem.

The signs are abundant, if you know where to look: in the corporate credit markets, in employment trends, in consumer credit trends, in government statements and in corporate revenue trends. You don't need to be a statistician or an insider to see them, but you do need to keep an open mind to see why the 30 goliaths of the Dow Jones Industrial Average ($INDU), companies such as Caterpillar (CAT, news, msgs), Intel (INTC, news, msgs), Bank of America (BAC, news, msgs) and Boeing (BA, news, msgs), could see their stocks rise 15% a year for three years.

Here's what I'm seeing just in the news of the past three weeks and what I think needs to happen next.

(Excerpt) Read more at articles.moneycentral.msn.com ...


TOPICS: Business/Economy; Culture/Society; Editorial; News/Current Events
KEYWORDS: bho44; bhodjia; dow; dow10000; stockmarket; wallstreet
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To: Ghost of Philip Marlowe

“I’d rather have the Dow at 2000 but with a strong US dollar.”
////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////
Wouldn’t we all!!

Near the Eastern entrance to the Great Smoky Mountains National Park in North Carolina is an operational water powered mill where you can buy “water ground” corn meal and grits. It was restored as a historic example but there is a poster inside detailing the original construction in the late 1800s. The whole thing was built in 90 days by hand labor at a total cost of...$600. That is not a typo. It is mostly built of yellow poplar wood. That same number of dollars today would buy a VERY small pile of poplar boards. To reproduce the mill from scratch would cost millions if it could be done at all. By the time the Dow returns to 14000 a McDonald’s happy meal may cost more than the original cost of construction of that magnificent mill.


61 posted on 09/14/2009 11:07:02 AM PDT by RipSawyer (Change has come to America and all hope is gone.)
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To: Vehmgericht

I forgot to check when I was swimming in the surf back in June, has the ocean started falling yet? I know the planet has begun to heal, it is obvious that the era of good feelings has begun to flower. There is so much joy and peace is guiding the planets and love is steering the stars and all that.
I think I will go out and skip down the Interstate and see if I can spot any Unicorns.


62 posted on 09/14/2009 11:12:40 AM PDT by RipSawyer (Change has come to America and all hope is gone.)
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To: DManA
I don’t know how you factor in the Obama risk into the risk/reward analysis

I've presented this thought to several "friends" who laugh at me, they can't believe this Clown is the equivalent of an economic terrorist who is trying to bring down the American economy. They are going to have to learn the hard way.

63 posted on 09/14/2009 11:18:04 AM PDT by BILL_C (Those who don't understand the lessons of history will repeat, repeat and repeat.)
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To: SeekAndFind
Wow does this guy ever have his head up his ass!

Letting Lehman fall was a mistake?

64 posted on 09/14/2009 11:19:43 AM PDT by Petronski (In Germany they came first for the Communists, And I didn't speak up because I wasn't a Communist...)
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To: Petronski
It has to be Robert Gibbs under another name. Only a true Obamaroid could come up with a fantastic line of B.S. like this!
65 posted on 09/14/2009 11:27:07 AM PDT by PSYCHO-FREEP (Give me LIBERTY or give me an M-24A2!)
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To: SeekAndFind
I've seen this before.

The data is not inflation adjusted, and there is huge productivity gains on fewer transactions due to layoffs, hours reductions and inventory draw down.

The markets will go up until they go down and down hard.

66 posted on 09/14/2009 11:31:46 AM PDT by Cold Heat
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To: Petronski
Must be one of Cramers rubes.
67 posted on 09/14/2009 11:34:04 AM PDT by Cold Heat
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To: umgud
What do you think the bubble in house prices was?

That idea died horribly last year. It isn't coming back.

There is no inflation. Wishing there were won't make it happen. Not even a lot of people wishing it - they did, and it didn't.

68 posted on 09/14/2009 11:35:11 AM PDT by JasonC
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To: SeekAndFind

Sometime after i’m dead!


69 posted on 09/14/2009 11:36:27 AM PDT by dalereed
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To: Petronski
God yes, anybody with 2 brain cells can see that by now. It cost trillions and was entirely unnecessary. It was going to go bankrupt yes, the shareholders would be zeroed yes, but doing nothing and letting creditors lose 85% and up on loans with Lehman anywhere in the intermediation chain, which is what they did, was stupid on stilts.

They were so worried about future moral hazard they forgot about hazard. And it blew apart.

70 posted on 09/14/2009 11:37:48 AM PDT by JasonC
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To: Muzzle_em
Dow is getting fairly close to the top--10,500 to 11,000. Fear not. There is still time, brother.

After that, the deluge.

71 posted on 09/14/2009 2:33:13 PM PDT by hinckley buzzard (truth--the liberal's kryptonite.)
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To: JasonC
There is no inflation

Maybe not officially, but have you shopped for food lately?

72 posted on 09/14/2009 2:42:18 PM PDT by P.O.E. (What's up with THAT?)
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To: P.O.E.
Yes. I am also sitting in a house that I got for half what it sold for at the top, and about 2/3rds of what it cost to build. There is no inflation.
73 posted on 09/14/2009 2:45:25 PM PDT by JasonC
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To: P.O.E.
Those who think there must be raging inflation because oh no, there is more money supply now than at the top of the bubble, are deluded. Today US households have $7.8 trillion in bank deposits and CDs, up from $6.7 trillion in 2006. This is supposed to cause inflation, despite the same households having $4 trillion less in house equity, $4 trillion less in stocks, $3 trillion less in pension assets, $1 trillion less in mutual funds, and $1 trillion less in small business equity.

People unclear on the concept - it is *deflation*.

74 posted on 09/14/2009 4:34:53 PM PDT by JasonC
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To: Cold Heat
Markets go up until they go down until they go up until they go down. Meaningless drivel.
75 posted on 09/14/2009 4:38:46 PM PDT by JasonC
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To: sniper63
In 2006, Americans had $6.7 trillion in bank deposits and a net worth of $62 trillion. Their cash was 10.8% of their net worth. Today Americans have $7.8 trillion in bank deposits and a net worth of $50 trillion. Their cash is 15.5% of their net worth, which has fallen 20% in 2 years. Anyone who think this is hyperinflationary is an idiot. The increase in the cash line item is one twelfth the size of the drawdown in the other asset line items. That is never going to result in reckless repudiation of the currency.

Some men are simply ideologically committed to the inflation scenario. They are exactly the ones who blew dollar prices into the stratosphere and created the crash. Houses are not worth more than the mortgages written against them. Oil is not worth $147 dollars a barrel, because dollars are not confetti. Pretending they are and going short them, with debt, on an epic scale, will not make them worthless. It merely gets those so betting, their own heads handed to them.

76 posted on 09/14/2009 4:44:43 PM PDT by JasonC
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To: JasonC
Markets go up until they go down until they go up until they go down. Meaningless drivel.

All true, and if it would just do that, we could all make money, up or down.

The issue here is exposure. How much are you willing to risk in a market supported by drivel.

77 posted on 09/14/2009 5:55:54 PM PDT by Cold Heat
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To: JasonC

Agree there is aggregate deflation, but the devil’s in the details of what’s in the basket used to calculate inflation. I posit that there is considerable erosion of purchasing power in consumables (especially when combined with lower wages).


78 posted on 09/15/2009 5:04:27 PM PDT by P.O.E. (What's up with THAT?)
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To: sniper63

Talk about irrational exuberance... the current rally makes the .COM sham seem reasonable. Don’t get me wrong... there is no technical end (to the rally) in sight.

And, remember... as Larry Kudlow recently said on CNBC, “... the market is a forward predictor of the economy.” Well... you know... except in 1928, ... 1986, 1999, 2006-Oct.07.............. Genius!

Coincidence that the current nonsensical stock market rally is fueled by liberals (in Washington) and the last by left-coast silicon valley loons (in California)?

Full disclosure. I do constantly hold a small-$ short option position the week of options expiration. Cheaper then loto tickets... with a more likely payout.


79 posted on 09/16/2009 3:51:42 AM PDT by NamVet71MP
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To: P.O.E.
30% of American household sector costs are real estate, whether mortgage payment or rent.

It isn't complicated. Higher costs of a box of cereal just don't compare with half priced houses.

80 posted on 09/16/2009 10:35:50 AM PDT by JasonC
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