7/14/14

Happy Birthday Dow 5,000 Prediction

© Terry Burnham

On July 11, 2013, on this page, I predicted that the Dow Jones Industrial Average would hit 5,000 before it hit 20,000. Here is some of what I wrote a year ago:
The Fed has been keeping interest rates at rock bottom lows to supposedly stimulate the economy… The idea that the Fed can save the economy is simply ridiculous. … What about fiscal policy? Can we deficit spend our way to prosperity? This is also ridiculous. Our problem is that we have overspent. If you had a problem of drinking 50 cups of coffee a day, would the solution be to drink 80 cups a day for a while? … 
Stocks will decline … I’m not predicting what will happen today, or in the next week or month. I don’t pretend to know the timing. I only think that I see the inevitable.
One year later, we revisit the macroeconomic policies and the impact on jobs and profits, and check in on the Dow Jones Industrial Average. In addition, we develop a scorecard to revisit periodically as the government attempts to end the unusual macroeconomic policy environment.