Bubble Schmubble
On August 26, 1994 I started my investment career on the ground-floor with Agora Financial. When I entered the Agora office that summer, which was situated exactly between the historic Shot Tower and the projects, every editor in there was calling the Dow a bubble.
"Dow 4,000? That's absurd. We're going back to 1,000. Maybe even lower."
That's what I heard over and over again from the likes of Adrian Day, Doug Casey, Jim Davidson and Bill Bonner.
In fact, in November of 1994, I was tapped by those very market "gurus" to write a report. Called "Beating the Bear," it was a guide on how to survive the coming collapse in the stock market. Every editor contributed strategies to protect investors from the inevitable crash.
Like I said, this was November 1994, and the Dow was trading around 3700.
By the time the report was published in February, the Dow had broken above 4000.
By July... 4700.
And by December 1995, anybody who implemented the strategies advocated in Beating the Bear lost their shirts as the Dow reached 5200 - a gain of 1500 points, or 40%.
We all know what happened next. The Dow - as well as the rest of the market - went on an historic 5-year frenzy until it reached its intra-day peak of 11,908 on January 14, 2000.
Between 1995 and 1999, the Dow averaged 23% gains each year.
But the interesting part of that historic move was this: During the entire way up, the perpetual bears and doom and gloomers continued their blather about how the market couldn't go higher.
But it did.
Investors who accepted the market for what it was - a bull - made fortunes. Those who stuck to the bear mantra, sat on the sidelines going short Yahoo, Cisco and Amazon month after month. In the end, the bears watch from the sidelines as others got rich.
Well, I'm here to tell you that the market is about to do it all over again. And I want you to participate in it.
By 2011, I think the Dow will reach between 25,224 and 30,440.
There, I said it. No going back now.
The difference between the 2 levels is this.
During the bull market of 1982 - 1999, the Dow averaged gains of 13.5%, annually.
Using a 13.5% annual growth rate as my assumption, I came up with these targets for the Dow over the next 5 years:
2007..................15,200
2008..................17,252
2009..................19,581
2010..................22,224
2011..................25,224
But if the Dow averages annual gains of 23.2% over the next 5 years, those targets increase substantially, and the Dow hits 30,440 by 2011.
As you read this, the Dow is trading at an all-time record high. And the S&P 500, the Dow Transports, the Dow Utilities, and the Russell 2000 are all within 2% of breaking to new record highs.
Ladies and gentlemen, we're in a new bull market.
It's time to prepare your portfolios for it.
Enjoy my friend,
Brian Hicks,
Executive Publisher
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