Hop on now before Dow reaches 40,000, says forecaster who nailed 2018 selloff
Sometimes the contrarian view can be very profitable. The world is looking for stocks to collapse. Here is one forecaster who feels that everyone is wrong. Stocks are set to take off eclipsing not only the all-time highs but rushing the Dow up to the 40,000 level.
Get your “Dow 40,000” hat orders in now.
That is, if you’re buying what our call of the day from Yves Lamoureux, president of macroeconomic research firm Lamoureux & Co., is selling. The stock forecaster, who correctly predicted a “panic event” in 2018, sees another big top coming for the Dow industrials, and says investors have roughly two years to hop on board.
“It will be what we call a ‘generational top’,” where the Dow will climb to 30,000 then 40,000 as an eventual high, but then plateau for a decade, Lamoureux told MarketWatch in an interview.
He says Fed Chairman Jerome Powell can be counted on to support stocks anytime they get in trouble, especially going into an election year where the economy needs to stay in tiptop shape. Powell appeared to do just that this week with hints of interest rate cuts, even if not everyone is convinced that move is coming.
“What I’m expecting...is another big move, in which people really go nuts. That's what’s kind of missing here,” Lamoureux said. “What separates me from everybody else is we study psychology, and what I find particularly odd now is there has been a very big flight of money out of stocks to bonds.”
That exodus satisfies another “panic event” he was looking for in 2019, he says.
He dismisses arguments that the Dow, which is up 17% from the December meltdown, has already come a long way. “You have to look to the real stocks — Apple AAPL, +0.37% , (Alphabet’s GOOGL, -0.57% Google, Envidia NVDA, +0.70% —some of these things are getting destroyed, and that’s where people have not made money in a year and a half now,” he said.
Lamoureux said he had 10% exposure to stocks at the start of the year, but is ready to move that to 50%, and maybe 100% by the third quarter. But he’s not a fan of those big tech names that could come under regulatory scrutiny, because he’s not sure how that scrutiny will resolve.
He advises investors to look for companies that are growing, but with no dividend and no big debt load. “Debt plus dividends, they get smashed. General Electric GE, +0.40% had a price of $60 at the high then fell to $7 dollars. The load of debt killed the stock,” he says.
How much of the increase will be due to manufactured inflation?
We may all be USD millionaires someday... but it wont be a good thing.
The next administration will need to raise taxes to make up for the budget deficit that this tax holiday (leading to massive share buybacks) has caused. That will certainly impact the Dow.
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I don’t think it’ll hit 40,000. The market is still finicky and a lot of rash moves are being made in regards to the economy. One bad decision and we’ll be seeing a drop
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