Dow 12000!!!

[Finster]

With all the media hoopla, it's a little surprising that even this erudite crowd hasn't got on the DOW 12000!!! bandwagon yet. But what the heck, just for fun, let's try it and see what we turn up. Will the DJIA close above DOW 12000!!! this week? Did today's close (11,992.68) mark a multi-year top, or none of the above (think about that last one carefully...)?

;)

[blazespinnaker]

Re: Dow 12000!!!

I'd rather debate whether or not it'll hit 13000 for a few years.

Anyways, as someone else wisely said, it's all noise until after the election.

[jk]

Re: Dow 12000!!!

i have a nickel bet with a friend of mine, established some time ago, that gold would hit 850 before the dow hits 12500. when gold was at 725 he turned down my suggestion that we double up to a dime. i'm tempted now, under very different circumstances, to offer again to double up.

[DemonD]

Re: Dow 12000!!!

I'd take that bet JK. 12500 is very attainable, especially if corporate earnings continue to drive upward (did you notice Apple's 27% earnings increase?)

One of the things I shake my head at is what I see as "oversimplification." The Dow Jones is only 30 stocks. To me, to bet for or against the Dow bets for or against XOM, MO, JNJ, MRK, WMT, PFE, etc. etc. Many of these companies have had severe contractions of their P/E ratios over the past 5 years; while some put the argument out there that the average P/E of the markets is still too high, if you look at the individual securities of the Dow 30 they generally aren't too high (versus their own historical valuation or the market at large), and therefore I believe 12500 to be well within reach. I've done what I consider to be a fair amount of DD on all of the Dow stocks, and most of them (if not all of them) are in very good shape from a company standpoint. That said, the closer we get to that level or even 13k, the closer I get to thinking about selling a bit off my positions.

While I can see how gold would be a useful tool for the coming years as a hedge against hyperinflation, I would never, ever take a bet against a quality run company like JNJ (Johnson and Johnson). To me that would be akin to betting against the house: you may get lucky in the short run but you will lose in the long-run. And a company like JNJ is a great hedge against inflation, as we see inflation in healthcare more than almost any other aspect of society; Eric put up a great chart pointing that out.

Another factor this time around v. 2000 is that there aren't as many pets.com or vcfundedinstacompanydotcom.com that aren't generating revenue that are going to blow up the nasdaq. While I understand the macro message Itulip puts out, the fundamentals are still there for some upward movement in share prices. Of course as price moves up, valuations become less compelling; but then again my two favorite oil stocks i've been tracking for almost a year are much closer to their 52 week lows than their 52 week highs.

The biggest worry I have about the stock markets is a huge exogenous event like the port of LA being nuked by N. Korea. My guess is that the current rally is not taking that into effect at all, and if more people jump into the party, again the upward momentum could be there.

JK, I might even make a nickel bet with you that the Dow reaches 13k before gold hits 850.

[Finster]

Re: Dow 12000!!!

Good take on stocks, DemonD. A lot of inflation has gone under the bridge since the major averages were last near these levels, and right here, in real terms, stocks are colorably still closer to their 2002 lows than their 2000 highs.

Valuation-wise, in general, stocks are best characterized as having been radically overvalued in early 2000, and now as merely somewhat overvalued. The main question, however, involves considering that there is no such thing as being invested in nothing (or joining a monastery!). You have to choose from the available menu of assets, whether it be cash, bonds, stocks, real estate, or commodities. Many of these alternatives (especially bonds) may be quite overvalued themselves, so just posing a question about stock valuation is missing the big picture.

All in all, while I am hardly a table-pounding bull on stocks here, it is sheer folly for any rational investor to be avoiding them entirely.

[jk]

Re: Dow 12000!!!

I'd take that bet JK. 12500 is very attainable, especially if corporate earnings continue to drive upward (did you notice Apple's 27% earnings increase?)

One of the things I shake my head at is what I see as "oversimplification." The Dow Jones is only 30 stocks. To me, to bet for or against the Dow bets for or against XOM, MO, JNJ, MRK, WMT, PFE, etc. etc. Many of these companies have had severe contractions of their P/E ratios over the past 5 years; while some put the argument out there that the average P/E of the markets is still too high, if you look at the individual securities of the Dow 30 they generally aren't too high (versus their own historical valuation or the market at large), and therefore I believe 12500 to be well within reach. I've done what I consider to be a fair amount of DD on all of the Dow stocks, and most of them (if not all of them) are in very good shape from a company standpoint. That said, the closer we get to that level or even 13k, the closer I get to thinking about selling a bit off my positions.

While I can see how gold would be a useful tool for the coming years as a hedge against hyperinflation, I would never, ever take a bet against a quality run company like JNJ (Johnson and Johnson). To me that would be akin to betting against the house: you may get lucky in the short run but you will lose in the long-run. And a company like JNJ is a great hedge against inflation, as we see inflation in healthcare more than almost any other aspect of society; Eric put up a great chart pointing that out.

Another factor this time around v. 2000 is that there aren't as many pets.com or vcfundedinstacompanydotcom.com that aren't generating revenue that are going to blow up the nasdaq. While I understand the macro message Itulip puts out, the fundamentals are still there for some upward movement in share prices. Of course as price moves up, valuations become less compelling; but then again my two favorite oil stocks i've been tracking for almost a year are much closer to their 52 week lows than their 52 week highs.

The biggest worry I have about the stock markets is a huge exogenous event like the port of LA being nuked by N. Korea. My guess is that the current rally is not taking that into effect at all, and if more people jump into the party, again the upward momentum could be there.

JK, I might even make a nickel bet with you that the Dow reaches 13k before gold hits 850.

i am not pounding the table that the stock market is doomed in the immediate future, so i too think 12500 or 13000 is quite possible. the bulls have been able to say strong results deserve higher stock prices and weak results mean we've seen the bottom and the fed won't raise rates so there should be higher stock prices. that process can go on for a while. i've never gambled for amusement, never wanted to. but i'd risk a dime just for the amusement.

[Finster]

Re: Dow 12000!!!

Just realized I hadn't even voted yet. After carefully considering the odds, I'll go with Door #1.

I predict the DJIA will surpass DOW 12000!!! before the October 20 close.

[DemonD]

Re: Dow 12000!!!

LOL Finster.

Since the Dow has come back up a bit again I just wanted to keep this thread alive. Haven't gotten to 12500 yet, and who knows what will happen with the elections?

To me, the Dems winning the House shouldn't trigger either buying or selling, but I expect tomorrow the Dow to drop in the morning, and make a comeback in the afternoon to finish right about where it started. This is an educated guess based on how Mr. Market seems to be responding to news nowadays.

Still keeping an eye on the scorecard though.

Edit: Looking good for the home team too:

http://post.polls.yahoo.com/quiz/financeresults.php



The Dow Jones Industrial Average reached another record high on Tuesday. Where will it end this month?

Higher 63%
Lower 23%
At current levels 15%
20146 Votes to date

[Jim Nickerson]

Re: Dow 12000!!!

LOL Finster.

Since the Dow has come back up a bit again I just wanted to keep this thread alive. Haven't gotten to 12500 yet, and who knows what will happen with the elections?

To me, the Dems winning the House shouldn't trigger either buying or selling, but I expect tomorrow the Dow to drop in the morning, and make a comeback in the afternoon to finish right about where it started. This is an educated guess based on how Mr. Market seems to be responding to news nowadays.

Still keeping an eye on the scorecard though.

Edit: Looking good for the home team too:

http://post.polls.yahoo.com/quiz/financeresults.php



The Dow Jones Industrial Average reached another record high on Tuesday. Where will it end this month?

Higher 63%
Lower 23%
At current levels 15%
20146 Votes to date

DemonD.

Your link to the poll doesn't link. Looks interesting to follow.

[DemonD]

Re: Dow 12000!!!

Sorry about that... guess there was some hidden code in there that didn't transfer when I did it.

To me, the Dems winning the House shouldn't trigger either buying or selling, but I expect tomorrow the Dow to drop in the morning, and make a comeback in the afternoon to finish right about where it started. This is an educated guess based on how Mr. Market seems to be responding to news nowadays.

Not a bad call eh?

After the most recent round of corporate earnings, I'm now more bullish than I was before... but of course you have to pick the right places.

BTW I think with all that has happened that a recession in Q2 07 as EJ predicted is very likely. I'm looking at my exit from some of my positions in January of 07.

[Finster]

Re: Dow 12000!!!

Sorry about that... guess there was some hidden code in there that didn't transfer when I did it.

Not a bad call eh?

Yeah I noticed that, DemonD!

After the most recent round of corporate earnings, I'm now more bullish than I was before... but of course you have to pick the right places.

Consonant with the S&P forecast on my web page (reproduced below). Take it with a grain of salt, though, because the forecasts do evolve over time. Anything can happen, and usually does. Wild cards include a resumption of rate increases and a slowing of profits from these very high levels. Generally, I do think the market is somewhat overvalued, but its main competitor, the bond market, is even more so.

[pahujasaurabh]

Re: Dow 12000!!!

Is the technology creeping out of recession. Cisco Systems reported handsome results in weakest quarter. Stock price and volumes are unbelievable.

Are we still talking of 12k?? Seems the bulls will take the rally much further..13k..14k...17k........................... .......................

:p

[DemonD]

Re: Dow 12000!!!

i am not pounding the table that the stock market is doomed in the immediate future, so i too think 12500 or 13000 is quite possible. the bulls have been able to say strong results deserve higher stock prices and weak results mean we've seen the bottom and the fed won't raise rates so there should be higher stock prices. that process can go on for a while. i've never gambled for amusement, never wanted to. but i'd risk a dime just for the amusement.

Wanted to bump this thread back up... I'm not sure whether I can call myself the winner yet. Yahoo Finance charts have the Dow hitting 12491 at the peak, but on the 52 week range it has this:

52wk Range: 10,607.40 - 12,545.70

I've searched yahoo's historical charts and no line touches 12,500, so I'm not sure where they are getting that range. And it couldn't have been a previous month, because the Dow closed today at an all-time high.

In any case when the daily chart hits 12500 I'll claim my dime...

At which point we can go double-or-nothing to 13,000.

[Jim Nickerson]

Re: Dow 12000!!!

http://bigcharts.marketwatch.com/int...w.x=0&draw.y=0

If that shows no data, choose 1 Year in left hand drop down under Chart Options.

bigcharts.com, enter "DJI" and "choose interactive chart"

You can point at the bars, if you have a bar chart, and isolate each day's data OHLC

12/18/06 intraday high 12545.74

jk, owes you 1/10 bonar.

[Finster]

Re: Dow 12000!!!

Folks, we have Dow 12000!!! Time to uncork the bottles and let the bubbly flow!

... oh ... that's right ...

... this time we're passing thru the other way ...

... never mind ...