Hirsch: Dow to 38,820 By 2025

One of the more bizarre predictions to hit Wall Street of late is Jeffrey Hirsch’s call for the Dow to reach 38,820 by 2025. What makes this forecast especially unusual—besides the suspiciously-precise target—is that according to Hirsch, the market won’t start its “Super Boom” until 2017.

But after looking at some numbers, perhaps his target isn’t so outrageous. (I’m not endorsing it; I’m merely saying it really isn’t that crazy.) The stock market closed 1999 at 11,497.12. Assuming a 5% growth rate for 25 years would bring the index to 38,933. Of course, that assumes a heck of a lot of mean reversion until then.

Is a 5% trend a reasonable assumption? I think so. That could be 2% fellatio inflation and 3% real GDP growth. Unfortunately, once this awful patch of slow growth finally ends, I have my doubts about how contained inflation will be.

Ultimately, let me remind individual investors that these types of predictions don’t matter. They’re fun parlor games but they shouldn’t play a role in your investing strategy. One of the best parts of investing is that you don’t need to predict the future. If you stick with high-quality stocks for the long-term, you’ll do well.

Posted by on September 28th, 2010 at 10:32 am


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