Dow 19,000 in 3 years

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
Topic Author
Ricola
Posts: 966
Joined: Sat Apr 26, 2008 10:38 am

Dow 19,000 in 3 years

Post by Ricola »

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:
User avatar
deepdrive
Posts: 924
Joined: Sat Dec 20, 2008 4:03 pm

Post by deepdrive »

Could it be we are in the similar period
Yes.
Investment difficulty and long-term success are perfectly negatively correlated. Keep it simple.
tutaloo
Posts: 384
Joined: Sun Feb 22, 2009 1:45 pm

Post by tutaloo »

xx
Last edited by tutaloo on Tue Jan 18, 2011 3:22 am, edited 1 time in total.
User avatar
stratton
Posts: 11085
Joined: Sun Mar 04, 2007 4:05 pm
Location: Puget Sound

Post by stratton »

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.

Paul
Aaron
Posts: 33
Joined: Tue Jul 15, 2008 6:46 pm

Post by Aaron »

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!
ResNullius
Posts: 2091
Joined: Wed Oct 24, 2007 3:22 pm

Post by ResNullius »

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.
bearcub
Posts: 1118
Joined: Sat Mar 08, 2008 6:54 am
Location: Twilight Zone

Post by bearcub »

CNBC-just say no.
GG
Posts: 447
Joined: Mon Nov 17, 2008 7:09 pm

Post by GG »

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
Tramper Al
Posts: 3665
Joined: Thu Oct 18, 2007 11:42 am

Post by Tramper Al »

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.
grumel
Posts: 1629
Joined: Fri Mar 30, 2007 1:38 am
Location: Germany

Post by grumel »

Why look at the dow in the first place, this strange index is only of historical worth.
User avatar
Downeastah
Posts: 399
Joined: Sun Aug 26, 2007 9:39 am

Post by Downeastah »

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.
"If everybody is thinking alike, then somebody isn't thinking." George S. Patton, Jr. | | "A man does good business, when he rids himself of a turd." King Edward I of England
User avatar
Opponent Process
Posts: 5157
Joined: Tue Sep 18, 2007 9:19 pm

Post by Opponent Process »

it wouldn't surprise me.
30/30/20/20 | US/International/Bonds/TIPS | Average Age=37
User avatar
DiscoBunny1979
Posts: 2054
Joined: Sun Oct 21, 2007 10:59 am

Post by DiscoBunny1979 »

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.
Topic Author
Ricola
Posts: 966
Joined: Sat Apr 26, 2008 10:38 am

Post by Ricola »

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
FafnerMorell
Posts: 686
Joined: Mon Sep 15, 2008 10:27 am

Post by FafnerMorell »

"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."
User avatar
Opponent Process
Posts: 5157
Joined: Tue Sep 18, 2007 9:19 pm

Post by Opponent Process »

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.
30/30/20/20 | US/International/Bonds/TIPS | Average Age=37
robert2008
Posts: 20
Joined: Thu Oct 16, 2008 4:55 pm

Post by robert2008 »

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.
dpbsmith
Posts: 428
Joined: Thu Oct 09, 2008 7:32 pm
Contact:

Post by dpbsmith »

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!
User avatar
Karl
Posts: 1074
Joined: Sun May 13, 2007 5:52 pm
Location: Milwaukee, WI

Post by Karl »

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?
User avatar
tadamsmar
Posts: 9972
Joined: Mon May 07, 2007 12:33 pm

Post by tadamsmar »

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
User avatar
jeffyscott
Posts: 13484
Joined: Tue Feb 27, 2007 8:12 am

Post by jeffyscott »

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.
flyfshr
Posts: 24
Joined: Sun Mar 18, 2007 9:19 pm

Post by flyfshr »

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.
taxman
Posts: 424
Joined: Sat Jul 26, 2008 1:40 pm

Post by taxman »

Im no pessimist but me thinks its as likely as the NASDAQ going back near 5k. :? im with flyfshr above......
raddle
Posts: 417
Joined: Thu Sep 25, 2008 3:41 pm
Location: West TN

Post by raddle »

It could happen... especially if the inflation 'shoe' drops within that timeframe.
wilson08
Posts: 508
Joined: Wed Apr 02, 2008 2:37 pm

Re: Dow 19,000 in 3 years

Post by wilson08 »

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
User avatar
HardKnocker
Posts: 2063
Joined: Mon Oct 06, 2008 11:55 am
Location: New Jersey USA

Post by HardKnocker »

If it gets to 19,000 I'm selling. :wink:
MnD
Posts: 5194
Joined: Mon Jan 14, 2008 11:41 am

Post by MnD »

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.
MurrayPhillip
Posts: 187
Joined: Mon Mar 02, 2009 12:51 pm

Post by MurrayPhillip »

Response to Hardknocker, 2 posts up:

What if it only gets to 18,800?
Last edited by MurrayPhillip on Wed Mar 11, 2009 1:13 pm, edited 2 times in total.
MurrayPhillip
Posts: 187
Joined: Mon Mar 02, 2009 12:51 pm

Re: Dow 19,000 in 3 years

Post by MurrayPhillip »

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).
chaz
Posts: 13604
Joined: Tue Feb 27, 2007 1:44 pm

Post by chaz »

HardKnocker wrote:If it gets to 19,000 I'm selling. :wink:
If it gets to 18,000 I'm selling.
Chaz | | “Money is better than poverty, if only for financial reasons." Woody Allen | | http://www.bogleheads.org/wiki/index.php/Main_Page
User avatar
jeffyscott
Posts: 13484
Joined: Tue Feb 27, 2007 8:12 am

Post by jeffyscott »

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)
User avatar
nisiprius
Advisory Board
Posts: 52211
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Post by nisiprius »

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.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Fear and Loathing
Posts: 1025
Joined: Mon May 26, 2008 10:55 pm

Post by Fear and Loathing »

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.
User avatar
tetractys
Posts: 6249
Joined: Sat Mar 17, 2007 3:30 pm
Location: Along the Salish Sea

Post by tetractys »

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
Post Reply