John Mauldin's commentary last week was on demographics, aging and the future. His free weekly column is avlb by email at www.frontlinethoughts.com and is well worth signing up for imo. Some of you might have seen the three week series he did this summer featuring Art Cashin on economics and the markets. Also worth reading. Geo.
You must get accustomed to traders mentality especially very short term ones: they flame posts where a guy pretend to PREDICT because from academics to their trading gurus most of them say you can't . They don't like someone who pretend to be smart enough to do so. Whereas if you come and make autoflagellation with autocritics like in communist party they will adore you on the contrary : Oh how much humility this guy must have . Good tactic that some in fact I remarked have employed here. So I encourage to go on, although I don't agree that 15000 could last forever : it would mean that economy has invented levitation law and many have pretended to do so since at least 200 years and each time economy and stock market has collapsed dramatically. So I only agree that 15000 is a possibility since that's what I have also on my model but I am more sure of my model on short term and less on long term - because the length of the serie is much shorter and so statistical significance more doubtful - and I will never pretend that this long term forecast has a very high probability of being accurate. It only means that one must NOT exclude this possibility. But between now and that time they can be a great plunge !
Just History about John Law: http://cepa.newschool.edu/het/profiles/law.htm John Law was a "reckless, and unbalanced, but most fascinating genius" as Alfred Marshall (1923: p.41) called him, with "the pleasant character mixture of swindler and prophet" as Karl Marx (1894: p.441) added. A Scottish economist, gambler, banker, murderer, royal advisor, exile, rake and adventurer, the remarkable John Law is renowned for more than his unique economic theories. His popular fame (infamy?) rests on two remarkable enterprises he conducted in Paris: the Banque Générale and the Mississippi Scheme. His economic fame rests on two major ideas: the scarcity theory of value and the real bills doctrine of money. John Law's "Real Bills Doctrine" of money applied the "reflux principle" to the money supply. Money, Law argued, was credit and credit was determined by the "needs of trade". Consequently, the amount of money in existence is determined not by the imports of gold or trade balances (as the Mercantilists argued), but rather on the supply of credit in the economy. And money supply (in opposition to the Quantity Theory) is endogenous, determined by the "needs of trade". Law's schemes were launched on the basis of this logic. Exiled in Europe because of a duel, Law ingratiated himself into the French court through patronage and friendship of the Regent, the Duke of Orleans. The state of French finances after Louis XIV's death in 1715 was so dismal that the Duke turned to Law for assistance. Law proposed the establishment of a state-chartered bank with the power to issue unbacked paper currency (see here for pictures of notes), the Banque Générale, which was established in 1716. Around the same time, Law also established the Mississippi Company, an enterprise designed to develop the then-French colony of Louisiana in North America. Law's note-issuing bank was a spectacular success -- until it collapsed after a bank run in 1720, plunging France and Europe into a severe economic crisis, which had an important role in setting the stage for the later French Revolution.
another ridicolous thread: better inflate your country all the way to third world level, something like argentina, then you might get something like dow 40.000.
"I just wanted to throw a bone out there to see what type of economic response you people could come up with and so far I have been SORELY disappointed". Citizennobody Make a fortune on the market and then come back and talk to us, you puffed up loser!
I should have clarified. I believe it is a short run prediction 6 to 18 months MAX but it is tied to the election cycle. Anything prediction past the election is moot...
I dont usually agree with you citizen, but in this case you might be right and then some.If the fed maintains its current coarse ,in regaurds to monetary and fiscal stimulous, a more than generous portion of that capital will wind up in the major markets and the housing sector.The only problem I have with dow 15000 is to what extent the dollar will depreciate to achieve this watermark.
Mortgage rates at 8.5%? Who exactly would be able to afford such a rate? If rates hit 8.5%, you could bet the housing market would be in a perma recession. Not to mention the entire economy. DOW 15,000? Not for at least another 15-20 years. The DOW is at 10,000 now and look at the fundamentals supporting it. A high p/e ratio, very weak relative topline growth, inflated earnings, massively underfunded pensions, weak pricing power, no pent up consumer demand, excess capacity, etc. We had an 18 year bull market. The biggest in history. The market rose over 10 fold. We've had 3 years of decline. The excesses have not been cleaned up yet.
Am I misunderstanding you, or were you born in 1990? My first mortgage was at 10% fixed, and that was a pretty fair deal for a first time homebuyer in 1987. If I recall correctly, we were in the middle of an all-out boom. Guess perspective plays a major part in valuation after all.