Dow to 1,000,000 in 100 Years?

Warren Buffett recently said that the Dow Jones Industrial Average will get to 1,000,000 in 100 years. To be fair, he said “over” 1,000,000.

That may sound incredible, but he was actually being conservative. Let’s get mathy.

Yesterday, the Dow closed at 22,761.07. To get to 1,000,000 it will need to grow by 3.855% per year for the next 100 years.

Contrast that to the last 100 years. The Dow closed at 79.26 on October 9, 1917. That works out to CAGR of 5.823%. So Buffett was assuming a growth rate of one-third less than before.

If we’re able to maintain the same rate of growth as the last century, then we’ll hit 1,000,000 in no time.

Just 2084.

Posted by on October 10th, 2017 at 2:22 pm

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