Last week, we noted Robert Prechter’s Dow 2,000 forecast.

Today, we are going to the other end of the scale: A wild Dow 38k forecast from the usually sedate Jeff Hirsch of Stock Trader’s Almanac (UPDATE: Full report here)

Bloomberg:

“The Dow Jones Industrial Average will surge to 38,820 in an eight-year “super boom” beginning in 2017, according to Jeffrey A. Hirsch, editor in chief of the “Stock Trader’s Almanac.”

“All previous major economic booms and secular bull markets were driven by peace, inflation from war and crisis spending, and ubiquitous enabling technologies that created major cultural paradigm shifts and sustained prosperity,” he wrote in a press release sent with the 44th edition of the book.

Hirsch’s forecast comes more than a decade after James K. Glassman and Kevin A. Hassett predicted the Dow would rise to 36,000 by 2005 in “Dow 36,000,” a New York Times bestseller. The 114-year-old average ended 1999 at 11,497.12 and sank as low as 7,286.27 in 2002 following the Internet bubble. The Dow then jumped to a record 14,164.53 in 2007 and fell to 6,547.05 in March 2009 after the worst financial crisis since the 1930s.”

I have no idea what he is thinking, but I will ping Jeff and inquire as to his thoughts on this. I assume he is in the “end of the secular Bear Market” camp in 2017, then a 1982 like ramp up. I do not disagree with the thesis (I’ve been saying that since 2002) but i don’t know how he gets a 3-4 bagger from there.

So I have to file this under “Really, really bad calls.” I’ll mea culpa if we come anywhere near 30,000 by 2025 . . .

>

Source:
Dow ‘Super Boom’ to Send Gauge to 38,820, Hirsch Says
Tara Lachapelle and Nikolaj Gammeltoft
Bloomberg, Sept. 27 2010
http://noir.bloomberg.com/apps/news?pid=20601010&sid=a0fkAgaY_Vps

Category: Really, really bad calls, Trading

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27 Responses to “Hirsch’s WTF Forecast: Dow 38,820”

  1. garo says:

    I think he means 2025 instead of 2018. Still unlikely but less unlikely. The 8-year super-boom begins in 2017 according to him.

    “The Dow Jones Industrial Average will surge to 38,820 in an eight-year “super boom” beginning in 2017, according to Jeffrey A. Hirsch

    ~~~

    BR: Doh! I’ll update above.

  2. Jack Damn says:

    Yeah, I believe the forecast is for DOW 38,820 by 2025…

    The Dow Jones Industrial Average will surge to 38,820 in an eight-year “super boom” beginning in 2017

    Even so, I still think DOW 36,000 by 2025 is kind of out there, but maybe he’s figuring in some kind of hyper-inflation.

  3. GreenTom says:

    The best part is that he gives four significant figures. Forget about 15 years from now, if anyone can predict tomorrow’s Dow to within 0.1%, I’d like to know them…

    Numerical nit-picks aside, a 260% increase over 15 years isn’t unprecedended…1950-65 and any 15 year window in 1980-2000 beat that.

  4. hammerandtong2001 says:

    “Beginning in 2017…”

    We’ll all be broke by then.

    .

  5. myopia says:

    The one good thing about the GFC is it’s shown how clueless the supposedly clued in are. They might as well predict the weather in 2018.

  6. dr dre says:

    easy… this is NOMINAL DOW Figure…. ie. he is an inflationinsta…. nominally it can be dow 40,000 but in real terms it could be dow 10,000 still…. by 2017 that could be a possibility….

  7. machinehead says:

    Dr. Dre is quite right. The DJIA is denominated in irredeemable paper dollars, whose value is whatever Banzai Ben and his merry pranksters want them to be.

    Hirsch is probably right, but for the wrong reason. In real terms, the Dow may never exceed its Jan. 2000 peak. Its risk-adjusted real return is still going to suck, regardless of the nominal number.

  8. Stuart says:

    He must be figuring on a devaluation stockmarket and a flavour of hyperinflation. He certainly can’t be basing this on expansion of earnings fundamentals.

  9. BennyProfane says:

    “hammerandtong2001 Says:

    “Beginning in 2017…”

    We’ll all be broke by then.”

    Or dead.

  10. The Dow closed today at 10,812.04, meaning it must gain 259 percent, or about 8.9 percent annually in 15 years, to reach Hirsch’s projection. It has lost an average of about 1.3 percent a year since the end of 1999. The Standard & Poor’s 500 Index slipped 0.9 percent a year including dividends between 1999 and 2009, the first negative return for a decade since data began in 1927, according to S&P.

  11. matt wilbert says:

    2025 is 14 years away. If you just get 7%/year from here, that is over 40000. You don’t need to invoke hyperinflation.

    Not saying it will happen, but it isn’t ridiculous.

  12. matt wilbert says:

    That was wrong–brain freeze. 7% isn’t enough. You need closer to 10%, but that still isn’t anything like hyperinflation.

  13. Petey Wheatstraw says:

    I predict there won’t BE a DJIA in 2017.

  14. Patrick Neid says:

    Is it really that amazing? If past is prologue, a little less than 5% per annum puts us over a 1,000,000 in a hundred years. In fact we are behind schedule in a perfect world–we should be approaching 16,000 right about now! The tendency is to fall behind and then have raging bulls where we catch up.

  15. TheUnrepentantGunner says:

    Im going to take Hirsch’s side, thank you very much.

    in 1985 and 1986, when the news would give you a 30 second snapshot of the markets, the only number that stuck in my head was the dow, and it would be 2-3k typically. in 2000 it went up five fold in an admittedly bull market.

    Barry if your thesis holds about long term trends, we will have 8 years of a bull and 7 years of a bear, about as neutral of a market as you can get. historically large cap stocks have done 9% a year. While it’s possible (probable!) that demography trends against us, this isnt really an outrageous call.

    I ran a flat 8% from 2010 assuming we close out at 11000 (up 1% from current levels).

    We would finish 2025 at 34893. Amazingly over a long time, getting a number exactly right is near impossible. If the market did 7% over 15 years (not horrifically off from 8.8%), we’d only be at 30k and the call looks bad. If we did 10%, the dow would be at 46k, and that 38k looks downright quaint.

    Barry is there a wager you’d like to make on this?

  16. super_trooper says:

    I hope I’ll be alive in 2025….
    My bet is that the Dow will be above 100000 in 2050………
    How’s that 16 year marker cycle working for the Japanese, they have experienced a very long bear market.

  17. bmoseley says:

    why bother with these forecasts
    few people can predict a quarter ahead, or a year. certainly not that far.

  18. dead hobo says:

    If the Dow rises that high, it will be due to hyper inflation and not because of extraordinary profits. It also means oil will cost $200 or more, gold will be $3500, houses prices will rise proportionately, and nobody will be able to afford anything. Squalid, crushing poverty will probably be the new normal in the US.

    The real question you should be asking yourself is “If the Dow rises that much, what will be the general price level and who will be able to afford anything?”

    Rather than looking at Dow 38,000 as an example of prosperity, it should realistically be considered closer to the End Of Days.

  19. dead hobo says:

    Robert Prechter’s Dow 2,000 forecast is far more synonymous with a healthy and vibrant economy than Dow 38,000. While holders of depreciated financial assets will probably start jumping out of windows again and the UST will scream bloody murder because of its massive debt holdings, the rest of the world will see a new prosperity. Cash and equivalents will be the new gold. People who own paid for things instead of leveraged financial assets would be the newly affluent.

  20. daf48 says:

    I really don’t know why I bothered to respond to this nonsense. This guy is actually respected in his field? I think maybe he’s trying to hock a book. Otherwise, he’s a disgrace.

  21. seekingdelta says:

    Why not make it a palindrome and go with 038,830!?!

  22. [...] Jeff Hirsch is the anti-Prechter — forecasting a wild $38K Dow in 2025. (Discussed this AM here, with Jeff’s full piece [...]

  23. Lugnut says:

    Guessing what will be on the Feds balance sheet, and the encumbered cost of interest on the national debt and how much the dollar will be purposefully devalued, probably not a crazy bet on his part

  24. VennData says:

    As hinted at above, Hirsh needs 9% a year to get there and Prechter a NEGATIVE 10% a year to get to 2,000ish by Hirsch’s 2025 date.

    Interesting how Hirsch went for the more reasonable “nine” so often used in marketing to Americans rather than the even “ten.” The media touts are wising up.

    A related question is what will the Goldbugs be touting in 2025? Rare Earth? Molybdenum?

    My bet is vinyl records. Any takers? The Goldbugs.. er… a… Vinylbugs will be able to reuse their “The supply is limited!” marketing routine. And something about how secretive central banks are always pushing digital downloads etc… Here’s to the future World Vinyl Council and their Vinyl Disc ETF, symbol ALBM.

  25. abbottmd says:

    >>>what will the Goldbugs be touting in 2025? Rare Earth? Molybdenum?

    ummm, they’re touting that NOW

    I agree with most everyone else…. a nominal Dow of 40,000 is probably likely within 10 years. The real question is what will a dinner for two cost that year.

  26. DeDude says:

    A new boom would take a technology that could greatly enhance productivity and thereby fuel wealth. The computer and information technology of the last boom allowed information and knowledge to be gathered and disseminated in record amounts and at record speeds. As a result the “productivity” of individual information/knowledge workers grew by an order of magnitude.

    Energy has the potential to provide that kind of single sector “order of magnitude” increase in productivity to drive the next boom. Imagine if a single $1000 panel/devise at the top of your roof could provide all the energy you need for your home and for transportation in your (electric?) vehicle. If the device lasted 10 years, that would be $100 per year for something that currently cost thousands of dollars per year. Businesses would get similar savings/productivity gains. Plus there would be huge cost savings in the energy distribution systems if most is produced locally.

    Genetics and biomedical is more likely to initially just “produce” incremental increase in longevity on a much to small scale to drive a boom (and with health care cost sucking out part of the gains by letting people live longer sickly). But the next boom (in 50-60 years) could come from biomedical sector, when we find ways to counter lifestyle illness with simple pills and keep 99% of the population free of illness for 99% of their life.