Dow 19,000 in 3 years

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Dow 19,000 in 3 years

Postby Ricola » Tue Mar 10, 2009 7:04 pm

Some say this recession is similar various periods in history. Was reading some history from one of Jim Grant's books and saw the following: on May 26, 1896 the Dow stood at 40.94, by August 8, 1896 it slumped to 24.48, but three years later in the summer of 1899 it had more than tripled to 77.

Could it be we are in the similar period, and if so, we may even see something like 19,000 on the Dow in 2012. Just a thought :wink:
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Postby deepdrive » Tue Mar 10, 2009 7:06 pm

Could it be we are in the similar period


Yes.
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Postby tutaloo » Tue Mar 10, 2009 7:16 pm

xx
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Postby stratton » Tue Mar 10, 2009 7:19 pm

Pick an asset allocation, stick with it and rebalance.

If your recent asset allocation was way too scary adjust to meet your risk tolerance.

FYI someone who engages in bad behavior such as performance chasing and market timing which causes investors to buy high and sell low will trail the "market" by about 4% a year. At that point a buy and hold portfolio, rebalanced annually, of 25/75 stocks/bonds will outperform the person with the bad habits.

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Postby Aaron » Tue Mar 10, 2009 7:45 pm

I hope it doesnt get that high, that quick! I would rather see a long slow progression lasting 30 years. enough of this bubble BS!
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Postby ResNullius » Tue Mar 10, 2009 7:52 pm

I was just watching Kudlow on CNBC, plus his group of four "experts." The group as a whole supported the idea that there's a good chance the DOW could return to 14000 within 18 months. That's a 100% increase in 18 months. I hope this happens, but I can't help but wonder what those guys are smoking.
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Postby bearcub » Tue Mar 10, 2009 7:59 pm

CNBC-just say no.
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Postby GG » Tue Mar 10, 2009 8:25 pm

Nobody was in the market in the 30's, let alone the 19th century. No comparison to today when nearly 100% of us little people are in the market
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Postby Tramper Al » Tue Mar 10, 2009 8:31 pm

stratton wrote:FYI someone who engages in bad behavior such as performance chasing and market timing which causes investors to buy high and sell low will trail the "market" by about 4% a year.

I tend to agree that our emotions work against us when it comes to timing. However, if it were as clear as you say, it would be a simple matter to contemplate this bad performance chasing and market times, but then DO the exact opposite. Can I conclude then that I will beat that same market by about 4% a year? That sounds OK.
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Postby grumel » Tue Mar 10, 2009 9:11 pm

Why look at the dow in the first place, this strange index is only of historical worth.
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Postby SurgPath » Tue Mar 10, 2009 9:49 pm

ResNullius wrote:I was just watching Kudlow on CNBC, plus his group of four "experts." The group as a whole supported the idea that there's a good chance the DOW could return to 14000 within 18 months. That's a 100% increase in 18 months. I hope this happens, but I can't help but wonder what those guys are smoking.


Yeah, and I bet they were all doom and gloom yesterday. These idiots just regurgitate what the market feeds them on any given day.
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Postby Opponent Process » Tue Mar 10, 2009 9:52 pm

it wouldn't surprise me.
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Postby DiscoBunny1979 » Tue Mar 10, 2009 9:54 pm

I don't like comparing past performance of the DOW to what might happen today. The ORIGINAL DOW consisted of 12 stocks, which none are in business today. How can anyone compare these non-existant companies to going-concerns today and suggest that based on past performance of companies that are no longer in business, the DOW could double or triple? My best guess is that the DOW will double or triple based upon the next bubble, because there's no reason to double or tiple without the kind of free money expectations of the past.
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Postby Ricola » Tue Mar 10, 2009 10:01 pm

DiscoBunny1979 wrote:I don't like comparing past performance of the DOW to what might happen today. The ORIGINAL DOW consisted of 12 stocks, which none are in business today. How can anyone compare these non-existant companies to going-concerns today and suggest that based on past performance of companies that are no longer in business, the DOW could double or triple? My best guess is that the DOW will double or triple based upon the next bubble, because there's no reason to double or tiple without the kind of free money expectations of the past.


Just for the record those 12 were:
American Cotton Oil
American Sugar Refining
American Tobacco
Chicago Gas
Distilling & Cattle Feeding
General Electric
Laclede Gas
National Lead
North American
Tennessee Coal & Iron
U.S. Leather
U.S. Rubber
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Postby FafnerMorell » Tue Mar 10, 2009 10:09 pm

"I remember back in the beginning of 2009, seemed like we'd never see the DOW above 10,000 again. And here we are with it at 19,000 in just three short years. The only downside: the $20 gallon of gas, and $15 gallon of milk. Luckily, they upgraded all the ATMs to only spit out $100 bills, so we adjusted. And the good news - my house is worth $300,000 again. Heck, it goes up to $400,000 if you include the '06 Accord in the garage."
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Postby Opponent Process » Tue Mar 10, 2009 10:11 pm

DiscoBunny1979 wrote:I don't like comparing past performance of the DOW to what might happen today. The ORIGINAL DOW consisted of 12 stocks, which none are in business today.


how many of today's 30 companies will be around in 100 years? not all 30, I promise you.
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Postby robert2008 » Tue Mar 10, 2009 10:24 pm

Ricola wrote:
DiscoBunny1979 wrote: The ORIGINAL DOW consisted of 12 stocks, which none are in business today.


Just for the record those 12 were:
American Cotton Oil
American Sugar Refining
American Tobacco
Chicago Gas
Distilling & Cattle Feeding
General Electric
Laclede Gas
National Lead
North American
Tennessee Coal & Iron
U.S. Leather
U.S. Rubber


Actually, many of these still exist in some form. Some examples:

American Sugar Refining was renamed Domino in 1900

American Tobacco was broken up due to being a monopoly in 1911. Among the companies it was broken into are R.J. Reynolds, Ligett & Meyers, and Lorillard.

Laclede Gas is the gas company in St. Louis, MO.

North American was broken up in 1955. Among its progeny are Union Electric (now part of AmerenUE, the St. Louis electric company), and PG&E (California's electric and gas company).

Tennesee Coal and Iron was bought by US Steel in 1907.

US Rubber eventually ended up as part of Michelin.
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Postby dpbsmith » Tue Mar 10, 2009 11:12 pm

Dow nineteen thousand?

Hey, what about Dow 36,000?

I was expecting Dow 36,000.

I was promised Dow 36,000.

I'm entitled to Dow 36,000.

Glassman and Hassett said "A sensible target date for Dow 36,000 is early 2005, but it could be reached much earlier." We should have had it years ago!

So, everybody, all together, let's tell 'em. I'll lead, you reply:

Nisiprius: Whaddawe want?
Bogleheads: Dow 36,000!
Nisiprius: When do we want it?
Bogleheads: Now!
Nisiprius: Whaddawe want?
Bogleheads: Dow 36,000!
Nisiprius: When do we want it?
Bogleheads: Now!
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Postby Karl » Wed Mar 11, 2009 7:42 am

dpbsmith wrote:Hey, what about Dow 36,000?

I was expecting Dow 36,000.

I was promised Dow 36,000.

I'm entitled to Dow 36,000.

Glassman and Hassett said "A sensible target date for Dow 36,000 is early 2005, but it could be reached much earlier."


Would it be deemed justifiable homicide if someone who bought their book and invested based upon that nonsense, decided to beat both Glassman & Hassett to death by bashing them upside the head until dead with their own book?
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Postby tadamsmar » Wed Mar 11, 2009 9:56 am

robert2008 wrote:
Ricola wrote:
DiscoBunny1979 wrote: The ORIGINAL DOW consisted of 12 stocks, which none are in business today.


Just for the record those 12 were:
American Cotton Oil
American Sugar Refining
American Tobacco
Chicago Gas
Distilling & Cattle Feeding
General Electric
Laclede Gas
National Lead
North American
Tennessee Coal & Iron
U.S. Leather
U.S. Rubber


Actually, many of these still exist in some form. Some examples:

American Sugar Refining was renamed Domino in 1900

American Tobacco was broken up due to being a monopoly in 1911. Among the companies it was broken into are R.J. Reynolds, Ligett & Meyers, and Lorillard.

Laclede Gas is the gas company in St. Louis, MO.

North American was broken up in 1955. Among its progeny are Union Electric (now part of AmerenUE, the St. Louis electric company), and PG&E (California's electric and gas company).

Tennesee Coal and Iron was bought by US Steel in 1907.

US Rubber eventually ended up as part of Michelin.


U.S. Leather was the only one go belly up.

American Cotton Oil is part of Unilever
National Lead is now NL Industries
Distilling and Cattle Feeding is now Quantum Chemical
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Postby jeffyscott » Wed Mar 11, 2009 10:11 am

I've been figuring on a possible tripling by the time I retire in 6-8 years...to use a better index, let's say S&P @ 2000. If we get there in 3, think I'll move to about 1/3 stocks.

M* estimates SPY expected return of about 30% per year, this is based on reaching "fair value" in 3. This would put us at about 1500 for the S&P in 3 years. I'd assume this projection is based on p/e of around 15, so that means earnings would be about 100 and if we did get to 2000, the p/e would be about 20. Right now this seems unlikely, but it certainly is not impossible.
press on, regardless - John C. Bogle
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Postby flyfshr » Wed Mar 11, 2009 10:27 am

For purely selfish reasons, I certainly hope we don't see the Dow at 19,000 in three years. For purely selfish reasons, I like accumlating shares at lower prices. Like another poster said - enough of this bubble and burst business. On the bright side, if the Dow reaches 19,000 3 years from now, I'll be much closer to my financial goals - the need to take risk would be much lower - a good chunk of TIPS would fit the bill nicely then.
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Postby taxman » Wed Mar 11, 2009 10:56 am

Im no pessimist but me thinks its as likely as the NASDAQ going back near 5k. :? im with flyfshr above......
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Postby raddle » Wed Mar 11, 2009 12:11 pm

It could happen... especially if the inflation 'shoe' drops within that timeframe.
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Re: Dow 19,000 in 3 years

Postby wilson08 » Wed Mar 11, 2009 1:00 pm

Ricola wrote:Some say this recession is similar various periods in history. Was reading some history from one of Jim Grant's books and saw the following: on May 26, 1896 the Dow stood at 40.94, by August 8, 1896 it slumped to 24.48, but three years later in the summer of 1899 it had more than tripled to 77.

Could it be we are in the similar period, and if so, we may even see something like 19,000 on the Dow in 2012. Just a thought :wink:


It is possible but I would not bet on it. Even though 19,000
in 2012 may be on the optimistic side I appreciate the post....
something other than pessimism and gloom is nice !

Wilson
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Postby HardKnocker » Wed Mar 11, 2009 1:51 pm

If it gets to 19,000 I'm selling. :wink:
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Postby MnD » Wed Mar 11, 2009 2:04 pm

One of my coworkers went 100% to cash in his 401-k on Monday.
So I say yes, as this guy is the ultimate contrarian indicator.
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Postby MurrayPhillip » Wed Mar 11, 2009 2:06 pm

Response to Hardknocker, 2 posts up:

What if it only gets to 18,800?
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Re: Dow 19,000 in 3 years

Postby MurrayPhillip » Wed Mar 11, 2009 2:12 pm

Ricola wrote: On May 26, 1896 the Dow stood at 40.94, by August 8, 1896 it slumped to 24.48, but three years later in the summer of 1899 it had more than tripled to 77.


But it was back to 42 in 1932...doing nothing for 36 years. (To be fair, I believe dividends where higher then so you did get your dividend along the way).
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Postby chaz » Wed Mar 11, 2009 2:21 pm

HardKnocker wrote:If it gets to 19,000 I'm selling. :wink:


If it gets to 18,000 I'm selling.
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Postby jeffyscott » Wed Mar 11, 2009 2:31 pm

MnD wrote:One of my coworkers went 100% to cash in his 401-k on Monday.
So I say yes, as this guy is the ultimate contrarian indicator.


he'll likely be buying (from hardknocker, chaz, and me) when it is at 15,000-19,000 8)
press on, regardless - John C. Bogle
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Postby nisiprius » Wed Mar 11, 2009 2:59 pm

grumel wrote:Why look at the dow in the first place, this strange index is only of historical worth.
Tradition, convenience, familiarity, easy access in many places. It goes back further than the S&P index, which began as a 90-stock index in 1923.

And, in point of fact, stocks are stocks and the two indices track each other reasonably closely.

It doesn't matter whether you use the Dow, the S&P, or some "total market" index as a proxy for "the stock market," you'll come to broadly similar conclusions about how "the market" behaves. Stocks are stocks.

Image

Personally, I think failure to correct for inflation is a much more serious problems than which index is used. I swear, the local bank has this office with this guy that sells LocalBankCo mutual funds and he has a humongous wall chart of the relative growth of stocks versus everything else, on a log axis that makes the Great Depression look like a divot. And it's not corrected for inflation, and it makes it look like 1965 to 1982 was part of an unbroken, smooth soaring upward swoop.

What frosts me is that the wall chart was published by Ibbotson Associates, and they have the inflation-corrected data in their books, and it wouldn't have cost them a nickel more in ink to print the inflation-corrected version. Their failure to do so proves to me that the chart is intended as propaganda, not information.
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Postby Fear and Loathing » Wed Mar 11, 2009 4:19 pm

nisiprius wrote:
grumel wrote:Why look at the dow in the first place, this strange index is only of historical worth.
Tradition, convenience, familiarity, easy access in many places. It goes back further than the S&P index, which began as a 90-stock index in 1923.

And, in point of fact, stocks are stocks and the two indices track each other reasonably closely.

It doesn't matter whether you use the Dow, the S&P, or some "total market" index as a proxy for "the stock market," you'll come to broadly similar conclusions about how "the market" behaves. Stocks are stocks.

Image

Personally, I think failure to correct for inflation is a much more serious problems than which index is used. I swear, the local bank has this office with this guy that sells LocalBankCo mutual funds and he has a humongous wall chart of the relative growth of stocks versus everything else, on a log axis that makes the Great Depression look like a divot. And it's not corrected for inflation, and it makes it look like 1965 to 1982 was part of an unbroken, smooth soaring upward swoop.

What frosts me is that the wall chart was published by Ibbotson Associates, and they have the inflation-corrected data in their books, and it wouldn't have cost them a nickel more in ink to print the inflation-corrected version. Their failure to do so proves to me that the chart is intended as propaganda, not information.


And this surprizes you? The purpose of financial "advisers" is to separate you from your money - nothing more, nothing less.

The OP of the thread probably made a typo - he probably meant DJIA 1900.0 - a much more realistic number.
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Postby tetractys » Wed Mar 11, 2009 4:26 pm

nisiprius wrote:I swear, the local bank has this office with this guy that sells LocalBankCo mutual funds and he has a humongous wall chart of the relative growth of stocks versus everything else, on a log axis that makes the Great Depression look like a divot. And it's not corrected for inflation, and it makes it look like 1965 to 1982 was part of an unbroken, smooth soaring upward swoop.

What frosts me is that the wall chart was published by Ibbotson Associates, and they have the inflation-corrected data in their books, and it wouldn't have cost them a nickel more in ink to print the inflation-corrected version. Their failure to do so proves to me that the chart is intended as propaganda, not information.

Obviously propaganda sells and "LocalBankCo" mutual fund sellers require the right propaganda.

It get's to me too. I've thought here and there about how to go about replacing those bank financial advisers with others who don't have the need to collect load commissions. For example what would it take for a bank to hold an employee who steers investors to investments in their best interest? Could there be trained employees willing to do it on the side, while also working as a regular bank clerk? Or could banks partner with fee only advisers in a way that both profit a little and the investor a lot? Or...?

It would be a banking paradigm shift. -- Tet
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