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Dow 40k Thoughts and Reworked Predictions Thumbnail

Dow 40k Thoughts and Reworked Predictions

It is a short week due to yesterday being Memorial Day. I am using that as an excuse to share some random bits of information regarding the market and the Dow closing above 40,000 for the first time. Just in case you missed things😉


  • A recent quote from Morgan Stanley as one of their bears turned more positive about the market – “Of course, it doesn’t matter what we think but what the market thinks.”


  • The above quote is consistent with a truth of the market – the market does NOT care about your feelings. Nor does it care about your opinions and what you think.


  • The chief equity strategist from Morgan Stanley has revised his year-end prediction for the S&P500 from 4,600 to 5,400. That’s only about a 20% swing up. Let’s hope him switching isn’t a contrarian sign.


  • Morgan Stanley isn’t alone as others are adjusting their year-end predictions.


  • The S&P500 is already about 10% higher than where the average year-end prediction said it would finish 2024. It is up around 11.5% as I write this.


  • This isn’t really anything new. I do feel bad for those firms creating these predictions because I am sure no one likes to make them, however, clients and the world of financial pornography (CNBC) demand them. And they are almost never right nor even close.


  • The point – try not to plan your future too specifically on an entity (the market) you think will act rationally.


  • Onto the Dow closing above 40K. It only took 128 years!


  • Let’s hope you were not heeding the advice of all the “experts” last year saying the probability of a recession was at 100% and bears (those who believe the market will crash) were everywhere.


  • Some historical information here: 
  1. The Dow cracked 20k in 2017.
  2. Since then we have had a couple of bear markets (down 20%)
  3. A global pandemic.
  4. Inflation levels not seen in decades.
  5. Rising interest rates
  6. And let’s not even talk about politics.


  • Again, all that and the Dow doubled in 7 freakin’ years!


  • Now, the Dow has had a great run recently, but it’s historical average is just over 5.5%.


  • This means at that pace it may take another 60 years to hit 1 million.


  • Regardless, the nice thing about the Dow doing well is it is made of up a broader range of industries than indexes like the S&P500 and NASDAQ. Within the Dow you have more financials, industrials and healthcare. This means there is nice growth across the broader market, which is a good thing, except for the bears😉


Alright, this seems like a good place to stop. Next week we will be talking about “Medical IRAs.” AKA – Health Savings Accounts. I am confident some of the information I will provide 99% of advisors are not even aware of. Get ready. Have a great week!