Boom Times Loom Soon


A fearless prediction: within the next decade, the US economy will recover and the stock market will set major new highs. Things look grim now, yes — but they always do before another season of growth begins. We've had good times and bad times aplenty in years past; the current bust is a lot worse than many, but there are also a lot of productive resources, and productive people, that will get to work again soon.

Numbers? In 2002 I foolishly forecast a Dow Jones Industrial Average of 20,000 in 2010, and further doubling every decade. That was wrong; it assumed higher inflation (general price level increase) than happened. Realistically one expects a long-term growth of 2%-4% in a mature economic system, which makes for a doubling time of about 20-30 years. But we're at a trough now, so likely growth will be faster for a while.

Bottom line? Don't gamble; do consider diversified no-load mutual funds for a significant amount of savings, at least until markets start to set new highs and everybody is optimistic about the future. That's the time to hunker down and move back toward cash.

(from the dot-com boom/crash era cf. TheCancerIdeology (1999-05-19), RailWeb (2001-01-03), PopGoes (2001-06-19), HopefulRejoinders (2001-06-23), LoomingDisaster (2001-08-06), BubbleBusters (2002-02-06), GrowthAssumptions (2004-04-17), ..., and see especially MoneyWisdom (2001-05-20)) - ^z - 2012-08-30