Dow at a Million?

The Dow at 1,000,000 by the end of the century is exactly what Warren Buffett predicted at the Forbes 100 Party recently.  Is that possible? Not only is it possible but it is more than likely.

Consider the 1900s. Buffett: “In the 20th century, the U.S. endured two world wars … the depression, a dozen or so recessions and financial panics, oil shocks, a flu epidemic, and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.”  That’s more than a 5% annual growth rate for the century. Add in dividends, and the return from 1900–1999 was more than 10%.

Can the market repeat that performance over the next 30,000 days (2017-2100)?  It doesn’t even have to. To get from today’s level of 22,340 to 1,000,000 in 83 years would require an annualized return of 4.7%. That’s a return that is hardly out of the realm of possibility.

The sad thing is that many will not participate in this growth.  With the media constantly bombarding them with “the markets are at an all-time high,” they simply lack the courage to get invested.  Remember, it is “time in the market” not “timing of the market” that is the key to successful investing.

Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Investments are subject to risk, including the loss of principal. Because investment return and principal value fluctuate, shares may be worth more or less than their original value. Some investments are not suitable for all investors, and there is no guarantee that any investing goal will be met. Past performance is no guarantee of future results. Talk to your financial advisor before making any investing decisions. The Dow Jones Industrial Average (DJIA) is a price-weighted average of 30 significant stocks traded on the NYSE and the NASDAQ. All indices are unmanaged and investors cannot actually invest directly into an index. Unlike investments, indices do not incur management fees, charges, or expenses. Past performance does not guarantee future results.