20,000 sounds like a bold number. Back in the early days, the Dow Jones Industrial Average was a mere 100 points. In the 1930’s if someone told you the DJIA would be 13,000 in 80 years they would most likely have sent them to the insane asylum. Fast forward to 80 years later and look where we’re at. The DJIA is pushing right up against 13,000 (with a lot of help from Apple being $556) and the NASDAQ is 3,000 (has not been 3,000 in 10 years). So what’s next?
If my calculations are correct, either the market will be going down sharply and quickly like it did in 2008 or will keep going right on up past 15,000 basically like it has since 2008. Will there be a correction? Will Europe derail the market once again? It seems as though the market lately has been shrugging off the woes from overseas. Just a few months ago, the market was in a wild state. Going up and down 400-500 points a day, but ultimately ending up where it started in the beginning of the summer.
Think about it. If the DJIA is 20,000, current levels are low. That means you think Exxon should be 110, Wal-Mart should be 85 and Caterpillar should be 175. I think already most companies are at very high levels and feel that there is a lot of air under the stock price. Meaning, if Apple goes down 150 points, it is still extremely high with a huge market capitalization. The market could get cut in half quickly; we’ve all seen it before.
Or, did corporate America get it right this time. Are the big companies so lean now that their profits are going to keep going thru the roof? Most large global companies figured out a couple years ago that they need about half the amount of workers they had employed to run their business effectively. For example, if company A had 100,000 employees in 2008 and they shed 40% of their work force in the last 4 years to 60,000 employees and are still making as much money as they were with 100,000 employees, their making 40% more profit. The bad effect of this is that these companies will never hire that amount of people back. Those jobs are considered lost forever.
The market is always a roller coaster, but has this one peaked at the top of the mountain of track and on its way down face first at a 90 degree angle? Or do we keep truckin’ up way past any levels we have hardly seen before?
