Someone needs to say this:
The fear mongers abound in the financial media. TV and online ratings seem to go to those helping to peddle fear and sell gold or structured annuities (with high commissions attached). Every individual investor I meet is scared silly. They do not realize what is at stake.
For the mainstream media, it is all about ratings. They have all learned that fear sells. Attacking Obama, attacking Bernanke, attacking European leaders, explaining government policy as if it were the family budget — it all works. The big-time media have garnered page views and sold papers.
Even when they attempt to show "balance" they have someone warning about Dow 5000 and the "bull" saying that stocks will go up 8% this year! Is it any surprise that watchers are scared witless?
Investors need to understand that they are missing more than an 8% move. Stocks will double. When will they get on board? Do they have a plan?
Let us attempt to restore some balance.
There is undue publicity given to Dow 5000. A 50% decline has happened only twice in history. The first time was in the Great Depression. The second time was when people incorrectly believed that the fall of Lehman would lead to another depression. As we now know, that was incorrect. March, 2009 was a buying opportunity. What about now?
Here is the proposition.
The Dow will double before it is cut in half.
I want to make this proposition right now, with the Dow around 10,000 and many forecasting 5000. A prediction needs a time frame. That is part of my current research. For the moment, let me just say that it is shorter– much shorter — than most people would think.
The key point? Most do not realize the cost of sitting out the return to normalcy of stock prices.
Obviously, this argument needs more evidence. With the Dow crossing 10,000, today was the right day to start.