Posted on 02/25/2013 11:08:51 AM PST by ExxonPatrolUs
Dow Record in sight: We are 200 points from breaking a new high in the Dow Jones Industrial Average (INDEXDJX:.DJI) which got me looking back at assets over the last 25 years in relation to the value of the US Dollar Index and the overall money supply.
Some of the best performing assets are the stock market and gasoline with bonds and housing putting in steady gains. Of course with all assets you get a whole lot more bang for your buck if you happen to time the market correctly. And assets like Stocks, Housing and Gasoline all have crash periods where Dow components go bankrupt and are replaced, homeowners lose their homes, and in the financial crash any Gasoline investor would have been forced out of the market.
Need to be Invested
But make no mistake the long-term trend is that you want to be invested in something that appreciates in value, you can get out of it if you need to as in liquid, and is going to be attractive to other investors over the long haul. But you have to be invested to take advantage of the trend of the growing money supply, currency in circulation, printing press phenomenon that ultimately underlies all asset values.
Your Grandpa was on to something
Whether it is the price of a car, a new house, the price of gasoline, a movie ticket, or a good stock there is going to be more money created each year chasing these assets in the system. This represents the phenomenon of “when I was a kid a coke cost a nickel” or you could buy a home or a vehicle in the 1950`s for prices that are unrecognizable today.
Dow 20,000 only a matter of time
In looking back at history of markets, if we take the Dow Industrials, there is no doubt we are going to blow past Dow 15,000, 16,000, 17,000 and so on based upon currency creation effects alone. The fact that markets are liquid, capital will flow in and out, there will be major pullbacks, those who fail to market time will get crushed at times, but make no mistake Dow 20,000 is a foregone conclusion.
Along with $20 bread and milk...
Doesn’t look good today.. LOL The only thing getting back on its feet are precious metals.
I smell a pullback coming pretty soon, and buying in at what is, at least for now, the top of the market is highly risky.
If you know it's the top you can short-sell.
Methinks this is highly specious ca-ca!
The only way that I see this ever happening is when the dollar value plummets to about $0.01 and it takes about $35.00 to buy a loaf of bread, $75.00 to buy a gallon of milk and about $245,000 to fill your Prius' gas tank!
It looks to me like his explicitly stated case for DJII 20K purely via inflation is far more reasonable than his very oblique, vague, deniable implications that it will come via the fundamental economics of steady growth.
Yes, yeeesssss. I’m drinking the Koolaid.
The FED is buying stocks!!! To prop up the stock market! At some point we will stop buying and the stock market will dive!!!
I heard the other day (Rush, I think), that the Treasury or the Fed, or both (maybe the Treasury printing unbacked $ for the Fed) is buying about $80+ billion per month of stock.
Worthless toilet paper buying stock - somewhere, sometime the dust has to settle and somebody gots to realize that money ain’t worth what it was. I wish I had a bunch of stock in the market at its high now - I’d sell all of it.
Absolutely will happen eventually. The stock market is one of the best places to be as long as it is long term. I have been in the market since 1987 and have done very well because I have not sold a thing....my dividens are reinvested and I purchase monthly stocks through individual stocks and mutual funds. Everyone really should be investing. I know some are afraid of what the future will do to stocks but it is always worse in our minds. Invest!!!
Yup. Inflation.
“Dow 20,000 is onluy a matter of time”
He gets the Captain Obvious award. However time horizon is almost everything. Huge difference in situation between someone 20 yrs old vs 60. Also the pro’s can bailout much faster than you and they are calling the shots.
Ridiculous. A DOW that is not adjusted for inflation is useless. And what’s the fascination with numbers with a lot of zeros?
Yes, 20,000, 30,000, 40,000 as long as the dollar keeps losing its value, sure, why not?
Which only proves the DOW is completely divorced from economic reality. I give Americans an triple A plus on their sense of optimism in the midst of global economic collapse.
It’s the equivalent of a wheel barrel full of dollars to buy stocks.
The 1970's saw huge inflation and the Dow did not rise correspondingly to the dollars fall.
1/1/1970 the DOW was at 850; 1/1/1980 it was at 963.
The stagnation of the Dow was more related to energy prices than any other factor.
There is a vast difference between the Dow average 40 years ago and the Dow average today. The value of the dollar was higher, making the value of the Dow correspondingly lower.
Today, the metrics that seem to govern the Dow's movement are different than those from 40 years ago. And, IMO, trying to draw a comparison between them is similar to comparing apples to beef steak!
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