Dow to close 2011 at 13,000 or above

I agree that Obama is in good position now, but the election is a full year away.

It doesn't take much for negative energy to flow fast.

Bad news in September or October of next year could vault Romney into the White House.

Solid reasoning for the Dow hitting 13,000 doesn't matter, it gets there or it doesn't.

If Bernake gets a toothache, the market drops. It doesn't have much to do with compnay's performances.

X-Runner wrote:

I agree that Obama is in good position now, but the election is a full year away.

It doesn't take much for negative energy to flow fast.

Bad news in September or October of next year could vault Romney into the White House.

Solid reasoning for the Dow hitting 13,000 doesn't matter, it gets there or it doesn't.

If Bernake gets a toothache, the market drops. It doesn't have much to do with compnay's performances.

I agree on all of this. Current investors are skittish...crazy.

Congratulations buy-and-holders - you are back to breakeven for the year.

And for the past 10yrs? ....buttkus...

forward looking expectations of where the market should be are a waste of time.

Lyndon LaRouche wrote:

And for the past 10yrs? ....buttkus...

this is a myth that will not die. Only large cap US stocks have gone nowhere for 10 years. if you had a diversified portfolio of global stocks and bonds, like everyone should have, you would have had a solid past 10 years.

For example, the no-brainer vanguard balanced index, which is a robotic 60/40 blend of stocks and bonds, returned over 5% per year for the past 10 years. And Vanguard far overweights the megacaps that have been so awful. If you bought virtually anything else instead, you would have done better.

Enough of this 'lost decade' nonsense.

And if you made regular continuous investments over the last 10 years, you have a gain.

Surely, plenty of buy-and-holders put in lots when the Dow was below 10-11,000 but not as much when it was above 12,000.

Who was all in before 2000 and hasn't contributed since?

Lyndon LaRouche wrote:

Congratulations buy-and-holders - you are back to breakeven for the year.

And for the past 10yrs? ....buttkus...

forward looking expectations of where the market should be are a waste of time.

Also it isn't like I put all my money in 10 years ago and haven't done anything since. In fact I have continued buying at many points during the last 10 years and since I am making more I have been putting more in. When the market tanked, I weighted my buying during the months when it was down and have been rewarded handsomely. I don't plan on selling anything for awhile since retirement is a couple decades away, but I will continue buying the lows and holding as much as possible.

I wouldn't get too giddy just yet... To be continued.

Dollar Cost Averaging - if you bought the Dow monthly for 30yrs, looking back over 80yrs of Dow history, your best return would be 5.3%, and worst 0.3% before inflation and dividends. Dividends are ~2-3% on average, and inflation 2.5%, so they wash each other out.

So the best that long term DCA can afford is 2-3% real returns. Which is fine - the implication is, "Save your money!" and don't try to get rich quick.

All of this is sound advice from Flagpole. What I don't get is why he tries to call the market this way and that. If he is investing for the 30yr haul, what possible difference does any rally or decline make.

Only a fool tries to mark his house to a market price every month/week/day, so why would you do it with your retirement portfolio?

I.P. Freely wrote:

What I don't get is why he tries to call the market this way and that.

I thought the same.

But the answer is - it's solely for entertainment and discussion purposes.

He never calls it to go down, not as a thread title. And never suggests to move money out in anticipation of it going down.

I do like his positive attitude, while others seem to be rooting for bad things to happen.

You are CORRECT that I don't tell people to move money out of the market, and I also don't tell them to move big chunks in either...because I don't try to time the market.So, you are then also CORRECT that I make short-term calls on the market for fun. It IS a way to gauge the mood of the country and how the economy is headed, but my investment strategy is the same if I think the Dow is headed to 13,000 by end of 2011 or if it's headed to 9,000.

X-Runner wrote:

I.P. Freely wrote:

What I don't get is why he tries to call the market this way and that.

I thought the same.

But the answer is - it's solely for entertainment and discussion purposes.

He never calls it to go down, not as a thread title. And never suggests to move money out in anticipation of it going down.

I do like his positive attitude, while others seem to be rooting for bad things to happen.

Sagarin wrote:

I wouldn't get too giddy just yet... To be continued.

Well, I'm not giddy about anything.

1) If you think I'm giddy about Obama, then you're mistaken. I want him to win of course and believe that he will, but I'm not giddy about it. I quit being giddy about politicians after Clinton disappointed me. Regarding Obama, I was merely stating a fact...that the Republicans have absolutely no shot in 2012 at the White House.

2) If you think I'm giddy about the market, you are also mistaken. Saying the Dow will reach 13,000 by end of December is hardly being giddy. It will pull back after it reaches that level for sure as for now 2012 to me doesn't look like a STELLAR year, and ultimately investors are looking for some STELLAR results to really propel the market north...that WILL happen at some point, but likely NOT in 2012.

Two things that I will say that are TRUE though:

1) Obama WILL win in 2012.

2) The economy just ain't all that bad.

Flagpole wrote:

2) The economy just ain't all that bad.

numbers please

Mine:

UCLA Ceridian flat/down (an alternative Indust Production #)

Rail traffic flat

Consumer spending flat

Home sales 25% of what they were in 2005/6

Capacity utilization at 75%

All this indicates that the way things are now, will remain that way for a quite a while. US GDP needs to grow >3% for the unemployment rate to fall. And that seems unlikely. I can't see where demand will come from - maybe you have some gleaned insights that escape the rest of us.

I.P. Freely wrote:

Flagpole wrote:

2) The economy just ain't all that bad.

numbers please

Mine:

UCLA Ceridian flat/down (an alternative Indust Production #)

Rail traffic flat

Consumer spending flat

Home sales 25% of what they were in 2005/6

Capacity utilization at 75%

All this indicates that the way things are now, will remain that way for a quite a while. US GDP needs to grow >3% for the unemployment rate to fall. And that seems unlikely. I can't see where demand will come from - maybe you have some gleaned insights that escape the rest of us.

1) GDP growth was 2.5% last quarter...not GREAT, but not horrible either...and an INCREASE over the previous quarter.

2) Manufacturing just expanded for the 26th straight month.

3) All the bad news about housing is already baked in.

4) Companies are continuing to make VERY good profits...up 13% on the year on average.

Consumer spending has dropped a little, and there are still some bad and sluggish things out there, but we are still better off than fall of 2008...WAY better, and things are generally pointing up...there will be pull backs here and there, but as companies continue to make tons of money (and the ARE right now), eventually they will hire as Catepillar is currently doing.

So unemployment remains high or climbs, and so demand declines

And still capacity utilization is 75%, with no capex. So this expansion is just w/ existing capacity.So no new employment, and no new demand. (e.g. utilization was 68% in 2008/9)

Fine, whatever that means. There is still no source for demand. I.e. who is going to buy the 8mm empty houses in the US so builders can start building?

this comes almost exclusively from productivity increases, not increased topline demand.

So we agree. The demand situation in the US is terrible, and will not improve any time soon.

Another way to frame it is, "where is the spark to light the fire?". There is none, and there is no real tinder at this point.

Unemployment is not dropping, we are incurring debt at the rate of $100 billion a month, Europe is still not solved, a lot of corporate cash is wiped out if pension deficits are actually considered etc. How much of that GDP growth is related to government spending that is going ot have to be cut back? We are nearing 100% debt to GDP. Maybe I'm wrong, but there seems to be a disconnect between the day to day, quarter to quarter market, and reality. We focus on short-term items and ignore structural problems.

I don't care about corporate profits if they aren't reducing the deficit or solving unemployment. The number one question that I haven't seen a single good answer to is how do we solve structural sovereign debt issues worldwide while improving growth? It's like saying we're going to de-leverage the housing market while not having a negative impact on home values. If you can tell me how we can de-leverage our world with the economy going full steam head, let me know.

I didn't say there weren't bad things out there still...ALL of the things you mentioned were inevitable going back to fall 2007, so it is MUCH better to be through some of it as it is ALWAYS better to be closer to the end of the problem than further.

BUT, you SHOULD care about corporate profits. They may hold onto them for a while, but eventually after several quarters of decent profits those companies WILL begin to hire, so it's better to have them making profits than not...absolutely NO chance of future hiring if they aren't making money.

I.P. Freely wrote:

Another way to frame it is, "where is the spark to light the fire?".

I know where the spark is! Mitt Romney!!!

See what I mean? Obama wins in 2012.

"The biggest bond gains in almost a decade have pushed returns on Treasuries above stocks over the past 30 years, the first time that’s happened since before the Civil War. "

Oh yeah....everything will be fine!...no problem....

And what happened to the US 1865-1899? DeeeeeeeeeFLATION!

Flagpole wrote:

[I didn't say there weren't bad things out there still...ALL of the things you mentioned were inevitable going back to fall 2007, so it is MUCH better to be through some of it as it is ALWAYS better to be closer to the end of the problem than further.

BUT, you SHOULD care about corporate profits. They may hold onto them for a while, but eventually after several quarters of decent profits those companies WILL begin to hire, so it's better to have them making profits than not...absolutely NO chance of future hiring if they aren't making money.

I probably didn't word my response right. I agree with you about profits (as long as they aren't BofA, Morgan Stanley etc. accounting gimmick profits). They are a positive sign and necessary for some hiring to occur in the future. I want to see entitlements and/or debt solved worldwide, which I believe slows growth. My concern is that we're driving along a highway talking about how nice the weather is, how smooth the road is etc. ignoring that we're headed for a brick wall two miles down the road.