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Jeffrey Hirsch's Prediction of Dow 38,820 by the Mid-2020s Is Looking Pretty Good

Jeffrey Hirsch's Prediction of Dow 38,820 by the Mid-2020s Is Looking Pretty Good

The Dow at 36,000 closes the book on one famously regrettable attempt at market handicapping. But not every headline-making stab at long-term stock prognostication has aged as poorly as James Glassman and Kevin Hassett’s dot-com flier.

You have to hand it to Jeffrey Hirsch -- his decade-old prediction that a Dow “super boom” would drive the average to 38,820 by the mid-2020s is looking pretty sweet right now. After more than tripling since the chief editor of the “Stock Trader’s Almanac” published his prediction in 2010, the Dow Jones Industrial Average is creeping up on the target with four years left to pull it off. 

“Incredulous” is how the 55-year-old Hirsch sums up reaction to his note, recalling a “WTF” reply from friend Barry Ritholtz, now a Bloomberg Opinion columnist. Eleven years later, “I’m happy, but I’m also thinking that we’ve gone a little bit ahead of it. So that means that I wouldn’t be surprised if we had a softer year next year, a little less performance.”

Jeffrey Hirsch's Prediction of Dow 38,820 by the Mid-2020s Is Looking Pretty Good

Hirsch wasn’t the only bull anticipating a strong recovery from the global financial crisis back when he published the piece in 2010. But he was one of the few who had the audacity to make a prediction 15 years out. 

“It’s a bold call, but also a very wise call,” said Vance Howard, chief executive officer at Howard Capital Management. “If you think about it, markets have historically all gone higher” in the long run. 

Over any 15-year timeframe, the Dow has posted positive returns 87% of the time over its entire 125-year history, rising 5.6% annually. But Hirsch’s call did more than anticipate the historical trend would play out -- the gauge is up 14% a year since he published. 

In 1999, Glassman and Hassett predicted the Dow would rise to 36,000 by 2005 in “Dow 36,000,” a New York Times bestseller. That didn’t happen, of course, with the internet bubble bursting the following year. 

The forecast from Hirsch came one year after a bear market. His essay was built on an observation that the market’s boom cycles tended to be accompanied by inflation from war and crisis spending as well as ubiquitous enabling technologies. 

He predicted that the withdrawal of U.S. troops from Iraq and Afghanistan and inflation caused by the wars, plus spending to end the financial crisis, would help push the Dow higher, with energy technology or biotechnology likely helping spur the rally between 2017 and 2025. 

Jeffrey Hirsch's Prediction of Dow 38,820 by the Mid-2020s Is Looking Pretty Good

The economy didn’t boom right away. In fact, before the 2020 pandemic, gross domestic product was stuck in the weakest recovery in decades. But thanks to a steadfast Federal Reserve and a resilient corporate America, the S&P 500 enjoyed its longest bull market in history.  

Inflation -- one element of Hirsch’s thesis that had been missing -- is now prevalent after the pandemic caused supply chain bottlenecks and prompted a surge in fiscal spending. 

“We’re getting this inflation that we’ve been waiting for, which is part of that super boom equation,” Hirsch said. “It could be an inflection point to move up to the next level towards the top.”

So, does everything fall apart after the big top? Not necessarily, according to Hirsch. 

“I think we drift higher, probably not as steeply,” he said, adding that the market is likely to go back to its usual pace of returns, where seasonal patterns and technical forces play a role.  

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