Is Dow 100,000 possible?

The short answer is Yes. The better question is: When will the Dow be at 100,000? The answer to that question is a little more involved, because you have to understand the Stock Super Cycle to see where that projection comes from. The stock market has an overall “secular” cycle that has a length of 36 years. This cycle has two components: an 18-year period of flat or level (secular bear) performance, and an 18-year period of steadily increasing (secular bull) performance that reaches the next “level” value. These periods are easily seen on a graph of the DJIA on semi-logarithmic paper and are called Stock Super Cycles.

The next Super Cycle upswing of the stock market will be an 18-year secular bull market from 2018 to 2036 that will see the market climb from 10,000 to 100,000. We don’t yet know how low it will go as a result of the next recession, so I would definitely wait until there is some confirmation that the bear market is over before jumping back in. However, I do expect the 2020s to be a good time to be in the stock market. I also expect the first half of the 2030s to be healthy for the stock market, but I expect a peak of the market around 2036. Typically, what happens during the stock market secular bear cycle is that the market will level out and maintain the next 10th-order level (100 is 10 squared, 1000 is 10 cubed, 10,000 is 10 to the 4th power, and 100,000 is 10 to the 5th power). It will resemble what we are seeing in the market now, with the Dow bouncing around the 10,000 point. The Dow in that next secular bear market will bounce around the 100,000 level.

What will drive the Dow to over 100,000? I believe it will be inflation, in the sense that a dollar won’t mean as much as it did in the past, so a stock price of $100 per share will be considered a low price point, as opposed to an “expensive” stock. Inflation will be propelled by the price of all consumables, as there will be shortages of water, food, and hard commodities in the future. This will be caused not only by an oil shortage, due to the implications of Hubbert’s Peak and the eventual rationing or extremely high price of gasoline, but also by shortages of basic necessities driven by worldwide population growth. Higher labor rates and higher salaries will drive higher prices for all products, but it will also provide additional capital for people to invest in the stock market. As people invest that same percentage of their pay in their 401k accounts, it will translate into more stock purchases and drive stock prices higher.

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