The Dow Jones Industrial Average set
a record this week, but it’s still far from the mark that
economist Kevin Hassett and I forecast in our 1999 book, “Dow
36,000.”
We wrote in the introduction that “it is impossible to predict how long it will take” to get to 36,000. Then, in the same paragraph, we rashly made a guess anyway: “between three and five years.”
Today, the far edge of that time frame is clearly in reach. From its low of 6,547 on March 9, 2009, the Dow has risen 117 percent. Another 117 percent in four years would put it at 31,022, just 16 percentage points shy of the magic number.
When we wrote our book, we expected that the stock market, as represented by the 30 blue chips of the Dow, would rise to 36,000 for two reasons.
First, investors had mistakenly judged the risk in stocks to be greater than it really was. Here, we drew from the work of Jeremy Siegel of the Wharton School of the University of Pennsylvania. He showed that, over long periods, stocks were no more volatile, or risky, than bonds.
We saw indications that the risk aversion of investors was declining -- as we believed it should. Lower perceived risk would mean higher stock valuation measures: rising price-to- earnings ratios, for instance.
Second, we assumed that real U.S. gross domestic product, the main driver of corporate profit growth, would rise at 2.5 percent a year -- a bit below the historic post-World War II rate, but still a decent clip. We warned, however, that small changes in growth rates could have big effects on stock prices.
...
(James K. Glassman is executive director of the George W. Bush Institute. The opinions expressed are his own.)
full
http://www.bloomberg.com/news/2013-03-07/dow-36-000-is-attainable-again.html
We wrote in the introduction that “it is impossible to predict how long it will take” to get to 36,000. Then, in the same paragraph, we rashly made a guess anyway: “between three and five years.”
Today, the far edge of that time frame is clearly in reach. From its low of 6,547 on March 9, 2009, the Dow has risen 117 percent. Another 117 percent in four years would put it at 31,022, just 16 percentage points shy of the magic number.
When we wrote our book, we expected that the stock market, as represented by the 30 blue chips of the Dow, would rise to 36,000 for two reasons.
First, investors had mistakenly judged the risk in stocks to be greater than it really was. Here, we drew from the work of Jeremy Siegel of the Wharton School of the University of Pennsylvania. He showed that, over long periods, stocks were no more volatile, or risky, than bonds.
We saw indications that the risk aversion of investors was declining -- as we believed it should. Lower perceived risk would mean higher stock valuation measures: rising price-to- earnings ratios, for instance.
Second, we assumed that real U.S. gross domestic product, the main driver of corporate profit growth, would rise at 2.5 percent a year -- a bit below the historic post-World War II rate, but still a decent clip. We warned, however, that small changes in growth rates could have big effects on stock prices.
...
(James K. Glassman is executive director of the George W. Bush Institute. The opinions expressed are his own.)
full
http://www.bloomberg.com/news/2013-03-07/dow-36-000-is-attainable-again.html
2 comments:
LOL! (Θα μου πεις, "τη δουλειά τους κάνουν", και αφού υπάρχει κόσμος που τους πιστεύει, μάλλον την κάνουν και αρκετά καλά, ε;)
όπως και εγχωρίως, υπάρχουν διαφορετικές αντιλήψεις της πραγματικότητας
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