In a August 18, 2020 MarketWatch.com article written by Brett Arends titled “Uh-oh: Investors predict ‘Dow 50,000’ — in just five years”, it states:
“…a sample of 1,500 people here in the U.S. who manage their portfolios, the average person expected the stock market to generate sky-high returns of 15.4% a year over the next five years.
“After accounting for dividends, that would mean stock prices would nearly double by 2025…”
The conclusion of the article:
“It is, ominously, generally near market peaks when investors are most bullish. Whether we’ll have a crash or a bear market is another matter.
“Yes, 15% could technically happen. But I wouldn’t bet on it.”
One element that is missing is the actual doubling rate data of the Dow Jones Industrial Average. Below is Doubling Rate of the Dow starting when the Dow Jones Industrial Average was at 55 on July 2, 1900 until 2020.
The actual doubling rate data suggests that the conclusions arrived by Mr. Arends are incorrect.
Our next article on this topic will break down the key elements to understand about the data presented which will make it clear that, doubling from the current level might be a modest proposal.