Truth be told, the market's rise this year is making me kind of nervous.
Just over the past two weeks, I've seen that the last of the permabears are throwing in the towel. Gold did not reach $5,000. Weimar-style hyperinflation has yet to put in an appearance. Europe has not "imploded." I'm still writing this e-letter in English and not in Mandarin.
That permabears were wrong is, of course, good news — unless you invested your money with these folks. In that case, you have my condolences.
But here is why I'm worried for the rest of us.
If the permabears' current round of predictions that the markets are set to go higher are as off as their other predictions have been, well then...
...look out below...
I concede I've been a lot more bullish than most pundits. And I caught a lot of flack when I predicted a Dow of 15,000 by October 31, 2012, and it failed to reach that level by then. Granted, I was a full six months early. But with the Dow comfortably above 16,000 today, my prediction of Dow 15,000 seems now almost coy and conservative.
Yet, unlike the permabears, I don't feel my creator endowed me with the blessed gift of prophecy or prescience. I just look at the numbers. And those numbers allow me to predict anything — even Dow 1,000,000, as you will see below.
2013: A Year to Remember
It's been a heckuva year. The S&P 500 has sliced through 1,500, 1,600 and 1,700 after rising more than 27%. The Dow is trading above 16,000. And the Nasdaq is trading at 13-year highs. Over the longer term, the Nasdaq has tripled since the market's bottom in 2009. The S&P 500 is up 171% since it touched the evil level of 666.
It's been a humbling year for the smart money crowd, raised on the mother's milk of diversification. To be "long and dumb" on the S&P 500 has trounced almost any other "bells and whistles" hedge fund strategy over the past five years. And if you've bought pretty much any asset class on the planet outside of U.S stocks — (remember the "China Miracle" and the BRICs?) — it has cost you money.
Some of the smartest money on the planet — Tudor-Jones, Bacon, Kovner, Druckenmiller and Soros, all hedge fund managers with 30-year track records comfortably ensconced in the Forbes 400 — have been caught off guard.