TJ, how much is a cup of coffee where you are? I don't think it is US$10 or anywhere near it. And the average price of a cup of coffee in Thailand/China/India determines when the Dow reaches 16,000, as that's where most CDMA is sold. Financial relativity theory is founded on CDMA-powered cyberspace and cups of coffee. There are other variables, such as hamburgers and purchasing price parity in the McDonald's measurement method, but you can get by with coffee and cyberspace as data.
The price of a cup of coffee in the USA is correlation, not causation. A cup of coffee is about $4 in the USA at Starbucks, [which is insanely expensive, but there it is]. The Dow is already 11,000. A 50% increase in the Dow would see 16,000. A 50% increase in a cup of coffee would see $6.
I guess the 16,000 will be reached when a cup of coffee is $5, or perhaps not even any more than it is now since there are a LOT of people picking coffee around the world, and a LOT of people working for minimum wage in the USA. NZ is producing lots of milk. China produces lots of cups. Water is available. China produces lots of tables and chairs. Buildings aren't going up in price where they serve coffee.
Interest rate increases have stopped. Housing prices are stopped. A bit of a squeeze is on. I don't expect to be given extra bonus Happy Meals each month for my USD. I'm getting 5.25% which isn't as good as what I can get on QCOM in a couple of years. A future P:E of 10 on current share price is being offered now. That's a lot better than 5%.
Feb 2007 for Dow 16,000 might even be doable. Except that people selling houses might depress share prices somewhat as they cash up various investments to repay loans and buy groceries. Maybe Feb 2008 would be more realistic. Heck, that's 6 years late. It's going to rise in a hurry when it does.
Mqurice |
