Few believed us back in May 2010 with the DJIA at 10,000 when we forecasted a 500+% market rise that would put DJIA at 38,820 by the year 2025. Now it looks like we may have been too cautious as DJIA is well above our initial projections as you can see in our updated 15-Year Projection graph below. No one foresaw or anticipated the Fed’s unprecedented quantitative easing program and 8-9 years of near-zero interest rate policy or the 2017 tax cut; and the impact of the two.
This pattern as illustrated in the updated “500+% Moves Follow Inflation” chart below shows how the market failed to make any sustained advance while the world was embroiled in a significant conflagration. Once the war ended, inflation caused by government spending kicked in and the stock market made 500+% moves between all of the major wars the U.S. has been involved in. All three previous secular bear markets associated with the three major wars of the 20th Century were also affected by crises that required a great deal of non-war-related spending.
![[500% Moves Chart]](/UploadedImage/AIN_0519_20190411_SuperBoom.jpg)
With DJIA up above 26,000 at this writing we could see 38,820 before 2025 or even a year or so later. In any event the Super Boom we forecasted is underway and it may be about to get a big delayed boost from the tech boom we have experienced over the past 20-30 years. In our original and continuing work on the Super Boom we have opined that the final part of the Super Boom equation that fuels the economic boom is what we dubbed “culturally-enabling, paradigm-shifting technology.”
On page 42 of the Stock Trader’s Almanac 2018 we detailed a host of potential technologies that could fit the bill. This page is topped with the prescient and salient quote from Yale Hirsch, our founder and the man who discovered this Super Boom pattern and phenomenon back in 1976:
“Another factor contributing to productivity is technology, particularly the rapid introduction of new microcomputers based on single-chip circuits.… The results over the next decade will be a second industrial revolution.” — Yale Hirsch (Creator of Stock Trader's Almanac, Smart Money Newsletter 9/22/1976, b. 1923)
“Economists have been waiting and wondering when all the tech advances of the past decade — smartphones, AI, big data, drones — would start showing up in the productivity stats…. economists wondered the same thing about the computer revolution of the 1970s and 1980s — right before the 1990s tech boom…. It took more than a half century for steam power to overtake water as the largest power source in Great Britain. It also took about as long for even half of U.S. factories to become electrified after the introduction of the alternating-current electric motor.” Clearly it takes quite a bit of time for businesses to incorporate and take advantage of new technology and reap the productivity benefits. It appears to us that the world is now on the threshold of this innovation boom.
Once again we are revising our 15-Year Projection chart. This was first drawn in 2011 when our book Super Boom: Why the Dow Jones Will Hit 38,820 and How You Can Profit From It (Wiley) hit the stores. The projection was based upon, drawn from, years of historical patterns and data. In the years to follow numerous unprecedented events occurred, the Fed held its key lending rate in a range of 0 to 0.25% for an incredible seven years, under took multiple rounds of quantitative easing (QE) and essentially pledged unwavering support for the market. Many other nations and central banks around the world were taking similar or even more aggressive steps to support their own economies and markets. Negative interest rates and negative yields on 10-year bonds are not what we consider normal.
Our current updated projection is illustrated in the red line in the chart. In keeping with the history of market performance in pre-election years and the current trajectory of the indices, it would not surprise us for the market to continue rising through April make new high here in Q2, then pause over the weaker summer months before hitting higher highs toward yearend. Next year promises to be an embattled election year and the likelihood of another significant correction or even a bear market are higher.