Hard to say.
The Nas has so much trash in it, so many stocks that should never have had IPOs, and are on the road to delisting. The Nas today is a different and uglier critter than the Nas in 1995 or 1990. The BleedingAndPurging will take a few more years, before the patient is restored to health.
Another random variable: whether they keep "re-engineering" the Dow, by adding the likes of INTC and MSFT. Maybe they'll add Newmont Mining next, to get some "growth" in the Dow.
Probably it's more usefull to try and predict growth rates for the S&P500, rather than the Nas or Dow. From yesterday's low, the S&P500 has to almost exactly double, to regain its 1553 high. How long that takes, depends on whether you think stocks are starting today, from an over- or under-valued level. Last week's BW has the trailing PE at 41, and the 12-month forward PE at 17. Take your pick, split the difference, or BlueSky your own number (pro forma or GAAP? With or without option costs?) Both those numbers look wrong, to me. One is based on trough earnings during the worst profits-recession in a generation, and the other is based on a lot of assumptions that can easily be argued.
In order to accurately predict how long it'll take for the S&P500 to double, you've got to guess correctly on all these variables (being badly wrong on any one of them will make your overall guess badly wrong):
1. inflation rate/interest rates
2. current valuations
3. profit growth
4. effect of political/military events on stock valuations
5. effect of technology on productivity.
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I was recently rereading some 5-year market predictions I wrote down in 1996. I won't repost it, it's too embarrassing. |
