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Jan
28
Get Ready For Dow 15000!
Filed Under economy
Brian Wesbury — the chief economist for First Trust Portfolios, LP — pulls us back from the ledge by letting us know that the economy isn’t as bad as everyone thinks it is in his opinion piece in the today’s Wall Street Journal. In fact, some economic heavy-weights are buying on sale and economic fundamentals are looking strong.
The good news is that the U.S. financial system is not as fragile as many pundits suggest. Nor is the economy showing anything other than normal signs of stress. Assuming a 1.5% annualized growth rate in the fourth quarter, real GDP will have grown by 2.8% in the year ending in December 2007 and 3.2% in the second half during the height of the so-called credit crunch. Initial unemployment claims, a very consistent canary in the coal mine for recessions, are nowhere near a level of concern.
Because all debt rests on a foundation of real economic activity, and the real economy is still resilient, the current red alert about a crashing house of cards looks like another false alarm. Warren Buffett, Wilbur Ross and Bank of America are buying, and there is still $1.1 trillion in corporate cash on the books. The bench of potential buyers on the sidelines is deep and strong. Dow 15,000 looks much more likely than Dow 10,000. Keep the faith and stay invested. It’s a wonderful buying opportunity.
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3 Responses to “Get Ready For Dow 15000!”
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[...] Hedges presents Get Ready For Dow 15000! posted at Christopher Hedges, saying, “Don’t despair when you hear news about the [...]
The day the Fed reduced rates by 3/4% just to help “shock” the market into action, was in my estimation the beginning of the recovery. I agree we’ll see 15,000 this year.
Hi Steve,
I remember looking back to the market crash of 1987 when I was in high school and wishing that I had had a rich uncle who had bought me $100,000 worth of stocks right after that market adjustment. I wouldn’t have to work today.
Of course, we’re getting our bargain prices right now and especially for people dollar cost averaging in their 401k plans with quality mutual funds buying solid stocks, they should do well when the market rises again.
Of course, now I wish I had bought some gold products — those prices have gone insanely high recently. Watch out for the coming gold bubble as people start to cash out.